The latest increase in the statutory retirement age in the UK has led to record employment among the 65-year-olds, while encouraging people living in poorer areas to work longer.
A study by the Institute for Fiscal Studies, published on Tuesday, found that around 55,000 people over the age of 65 were in paid work in 2021 due to the gradual increase in the retirement age, from 65 to 66 years old, between the end of 2018 and the end of 2020.
The reform allowed 7% more men and 9% more women to stay in work, bringing the employment rate for men aged 65 to 42%, the highest since the 1970s. women reached a likely all-time high of 31 percent.
Emily Andrews, deputy director of evidence at the Center for Aging Better, the charity that funded the research, said it showed the higher retirement age had been “an effective policy for extending the working lives of employees”.
However, the research also contained several warning signs for policymakers as they prepare for the retirement age to rise to 67 from 2026 and an independent review begins to examine the case for it. further increases to manage the budgetary pressures of an aging population.
First, people living in poorer areas were much more likely to stay in work while waiting to qualify for the state pension. After the change, the employment rate in the fifth most disadvantaged local areas increased by 13 percentage points for women and 10 percentage points for men, compared to respective increases of only 4 and 5 percentage points in the fifth most prosperous areas.
Renters tended to stay in work more than landlords, and those without qualifications were more likely to do so than those with a college education, the research showed, suggesting financial need dictated their decisions .
Most of those who delayed retirement were likely to be better off financially, although they would have preferred to stop working sooner and have more free time, the IFS said. This was because they mostly worked full time, earning more than the lost retirement income.
Jonathan Cribb, associate director at IFS, said it suggested there was “an unfulfilled desire for many people approaching retirement age to be able to work part-time, or more flexibly, than ‘they currently don’t’.
More than 90% of those affected by the increase in the retirement age have not changed their retirement plans, the IFS said. A majority continue to retire before the age of 65, either due to health problems or because they can afford it, while a significant minority choose to work longer.
But a smaller group – including 5,000 unemployed and 25,000 unable to work for health reasons – had been particularly hard hit, the IFS said, as they were entitled to much less help through the benefit system. than they would have been had they been eligible. for state retirement.
Andrews said it underscored the need for the government to ‘take meaningful support seriously to help unemployed people in their 60s get back into paid work’, so that further increases in the retirement age do ‘not further harm those who are already disadvantaged by an ageist labor market”.