July 1, 2014
Living longer, still working but earning more – the changing world of the UK’s older workers
A new report from the Institute for Fiscal Studies challenges some of the most commonly held misconceptions about the UK’s older workers, their health, income and status. The Changing Face of Retirement has been produced by the IFS in partnership with the Joseph Rowntree Foundation and the Economic and Social Research Council. Over the next ten years, it claims that changes to the pension provision, a rise in the retirement age, improving levels of long term health and the fact that many more people will remain in relationships as the life expectancy of men improves will mean more and more older people will supplement their pension incomes with paid work. The report also suggests that there will be more women between the ages of 65 and 69 in work than men by 2021 but both groups will see significant increases as the proportion of the total population aged over 65 increases by over a fifth.
By that year, 37 percent of women in that age range will be in some form of paid employment compared to 33 percent of men. The retirement age for women will rise to 66 the previous year, the improving health of both sexes and the need to boost pension income with pay will make this demographic even more prevalent in the workplace than it currently is.
They’ll also see a rise in their overall incomes, averaging around 2 percent a year in real terms to 2023, driven by increases in private pensions and employment. However, those reliant solely on a state pension will see their income rise by just 1 percent a year in real terms over the same period, exacerbating the problem of income inequality and compelling more over 65s into the workforce, if their health allows.
As with other demographics, there is a downside to employment. The report concludes that: ‘it is important to remember that financial well-being and income poverty are not the full story: while we project that the incomes of older people will grow strongly with increased employment, this is clearly at the expense of leisure time. With the growing number of older people in work comes a falling number available to provide care to grandchildren or voluntary support in their communities, perhaps tempering what initially appears to be an unequivocally positive story.’