Seniors working longer due to recent state pension age changes suspending retirement

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New research has found that people with lower-paying jobs are more likely to respond to raising the state retirement age by working longer than those who are better off.

Data from the Institute for Fiscal Studies (IFS) shows that, collectively, 65-year-olds are working an additional 1.8 million hours per week due to the latest increase in the state retirement age from 65 to 66, which took take place gradually between 2018 and October 2020.

In mid-2021, the male employment rate at age 65 increased to 42% and the female rate to 31%; both are the highest since at least the mid-1970s.

And for women, the figures are likely to be the highest ever recorded in the UK, according to the research, funded by the Center for Aging Better.

However, the effects of augmentation were also found to be uneven.

In the bottom fifth, the employment rate of 65-year-old women increased by 13 percentage points and that of men by 10 percentage points.

In more affluent areas, female and male employment rates at age 65 rose more smoothly, by four and five percentage points respectively.

This almost certainly reflects the greater need for income at older ages among those living in the poorest areas, the IFS said.

Jonathan Cribb, IFS Associate Director and author of the report, said: “The strong increases in employment came in particular from those in poorer areas and to those with lower levels of education, suggesting that without a state pension can afford to retire.

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Overall, more than nine out of 10 65-year-olds don’t change if they have a paid job at age 65 simply because of higher state pension age, he added.

This is often because most men and women have already left the labor market before reaching the age of 65, and some others would have remained in paid work even if the state retirement age had been kept at 65.

In mid-2021, the male employment rate at age 65 rose to 42% and the female rate to 31%
In mid-2021, the male employment rate at age 65 rose to 42% and the female rate to 31%

The IFS said the investigation will be crucial evidence for Baroness Neville-Rolfe as she conducts the second independent review of the state pension age for the Department for Work and Pensions (DWP).

It also estimated that an additional 5,000 65-year-olds are unemployed and looking for work as a direct result of raising the state retirement age from 65 to 66.

In addition, about 25,000 people are out of work for long-term health reasons, rather than retiring, as a result of the state retirement age being raised from 65 to 66.

Laurence O’Brien, IFS Research Economist and another author of the report, said: “For most 65-year-olds, around 640,000 of them, a higher state pension age simply results in lower earnings rather than change their work patterns.”

The researchers also suggested there may be an “unsatisfied desire” among many people approaching state pension age to be able to work part-time, or on a more flexible basis than at present.

Emily Andrews, deputy director of testing for the Center for Aging Better said, “With the SPA [State Pension age] about to climb even higher, the [UK] The government needs to be serious about meaningful support to help unemployed people in their 60s get back into paid work.

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Otherwise, this policy will further harm those who are already disadvantaged by an age-discriminatory labor market.

“And now is clearly the time to seriously consider what additional financial support should be offered to those for whom work is simply not an option.”

Phil Brown, policy director at B&CE, a provider of the People’s Pension, said: “The report’s findings provide further evidence that reforms to the automatic enrollment system are needed.

“Lower the £10,000 earnings threshold for automatic enrollment to £6,240, allow 18-21 year olds to join a workplace pension and make contributions count from the first pound earned It will benefit people with lower incomes and allow more people to save money, which will supplement their State Pension in retirement.”

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A DWP spokesperson said: “Older workers are a great asset to business and our Billion Pound Jobs Scheme and 50 Plus: Choices offer are supporting older workers across the country to get back to work. train, develop new skills and start working.

“Raising the age of the state pension in accordance with changes in life expectancy has been the policy of successive administrations for many years.”

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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