Raising the retirement age in the UK leads to record employment among 65-year-olds

The recent increase in the retirement age in the UK has led to record high employment rates among 65-year-olds, while forcing those living in poorer areas to work longer.

A study by the Institute for Fiscal Research, published on Tuesday, found that about 55,000 more 65-year-olds were paid for work in 2021 as a result of the gradual increase in the retirement age from 65 to 66 between the end of 2018. 2020 d.

The reform has resulted in an additional 7% of men and 9% of women remaining in employment, with the employment rate for men aged 65 to 42% being the highest since the 1970s. The female employment rate has risen to a likely all-time peak of 31 percent.

Emily Andrews, deputy director of evidence at the Center for Better Aging, the charity that funded the study, said it showed that a higher retirement age was “an effective policy to extend working life among employees.”

However, the study also contains several warning signs for politicians as they prepare to raise the retirement age to 67 by 2026 and when an independent review begins to consider further increases in managing the fiscal pressure of an aging population.

First, people living in poorer areas are much more likely to stay at work while waiting to receive a state pension. Since the change, the employment rate in the fifth most needy local areas has increased by 13 percentage points for women and 10 percentage points for men – compared to a corresponding increase of only 4 and 5 percentage points in the fifth most prosperous areas.

Tenants tend to stay longer than homeowners, and those without qualifications are more likely to do so than those with a university degree, according to the study, which suggests that financial necessity is driving their decisions.

Most of those who have delayed retirement are likely to be better off financially as a result, even if they would prefer to stop working earlier and have more free time, IFS said. This was because they worked mostly full time, earning more than their lost retirement income.

Jonathan Krieb, an associate director at IFS, said it suggested “there is an unsatisfied desire on the part of many people approaching retirement age to be able to work part-time or more flexibly than they do now.”

More than 90% of those affected by raising the retirement age have not changed their retirement plans, IFS reported. The majority still retire before the age of 65, either because of health problems or because they can afford it, while a significant minority choose to work longer.

But a smaller group – including 5,000 who were unemployed and 25,000 who were unable to work for health reasons – was particularly hard hit, IFS said, as they qualify for much less assistance through the benefits system than they would be if they were eligible for a state pension.

Andrews said this highlighted the need for the government to “seriously engage in significant support to help the unemployed in their 60s return to paid work” so that further raising the retirement age would not “harm further” to those who are already disadvantaged by the adult labor market ”.

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