Out-Law News 2 min. read

Number of workers staying on beyond state pension age doubles in two decades


The number of people staying on in employment beyond the state pension age (SPA) has doubled to 1.4 million in the past two decades, according to official figures.

The Office for National Statistics (ONS) said in a report (5-page / 311KB PDF) that the number of workers above SPA had risen at a faster rate than the population, with the proportion of the older population in employment up from 7.6% in 1993 to 12% by the end of 2011. It suggested this could be down to "improved health and well-being" and people living longer, as well as financial pressures.

Men are currently entitled to claim the state pension from the age of 65, which women are entitled to a state pension from the age of 61. The default retirement age (DRA) was abolished in October last year, meaning employers are usually unable to force employees to retire once they become entitled to draw a pension.

Pensions law expert Simon Tyler of Pinsent Masons, the law firm behind Out-Law.com, said that the fact that older workers were able to find and hold down jobs was a "welcome trend" when considered alongside the UK's increasing proportion of elderly citizens. The data showed that the parts of the country with the highest rates of older workers were those where people were living longer.

"The number of older workers will have to increase if the economy is to grow and meet the increase in pension and care costs," he said. "Government policy, such as the abolition of the default retirement age and of the requirement to take pension by age 75, is designed to support this trend. However, ultimately whether it can continue will depend on the availability of suitable jobs together with older workers' health and income requirements."

Darren Philp, policy director at industry body the National Association of Pension Funds (NAPF) said that the figures reflected the UK's "rapidly changing demographic". "Many are choosing to ease into their retirement for social and financial reasons, and part time work is a popular option. Employers also value the skills and experience of older staff," he said.

"The problem comes when people want to retire but end up stuck ay work because they cannot afford to leave," he added. "With half the workforce not saving into a pension, this is going to become a painful reality for millions. It is vital that we get more people planning and saving for their old age, and that they start as early as possible."

The figures showed that older workers were twice as likely to be working part-time rather than full-time, and tended to remain with the same employer. A higher percentage of older people worked in firms with fewer than 25 employees than those under SPA, which the ONS suggested may be related to "the fact that smaller firms are less likely to offer a workplace pension than larger firms". This could result in individuals having to work longer in smaller firms for financial reasons, they said.

The ONS added that workers over SPA were more likely to be self-employed than those below SPA, with 32% of older workers registered as self-employed compared to 13% of those below SPA. Coupled with the increasing trend for part-time work among those over SPA, the ONS said that those remaining in the workforce were "possibly helped by the financial support of their state pension and other pension arrangements, which allows them to fit their work around other engagements".

Around 61% of older workers remaining in employment by the final quarter of 2011 were women and 39% were men, the ONS said. Almost two thirds of women remaining in work held jobs classed as "lower skilled", such as cleaners and care workers, while around two thirds of the men worked in "higher skilled" jobs including management and executive roles.

Under current plans the SPA for women in the UK will rise to match that of men from 2018 before it increases to 66 for both sexes in October 2020 and to 67 by 2028. The Government has also announced that it plans to introduce an "automatic mechanism" to link state pension age to life expectancy, with details of how the scheme will operate due to be published shortly.

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