As pensions haven’t worked out, older people keep working

by Dr. Ros Altmann

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The CIPD analysis showing more over 50s in work does not tell the full story of what is happening to older generations in today’s Britain.

Firstly, the numbers of people aged over 50 are increasing sharply, as the baby boomers reach age 65. That swells the actual numbers of people in the age range 50-64 relative to 2008. As the smaller generations of wartime babies are now over age 65 and have moved into the 65+ category, it is important not to lose sight of the demographic impacts on employment figures. Just because more people aged 50-64 are working, does not mean they have had a much better time during the recession! In fact, the figures produced by the ONS and analysed in the CIPD Work Audit actually show some important factors which should not be overlooked.

The reasons why there are more people working in the age range 50-64 are as follows, most of which are not properly reflected in the CIPD conclusions:

1. There are more of them as the demographics have shifted and small wartime baby generations reach older ages and the large numbers of baby boomers swell the over 50s’ numbers.
2. People coming up to retirement are increasingly finding their private pensions are not as good as they had hoped – with women particularly having very little private pension. This means they have to stay at work if they want a reasonable income.
   Between 2004 and 2010, ONS figures show that the average retirement age for men rose from 63.8 to 64.6 years. Over the same period average retirement age for women rose from 61.2 years to 62.3 years. So women are already retiring, on average, after state pension age and I am sure that the figure has risen even further since 2010!!
3. Many women are going back to work in later life, or have to keep working for a variety of reasons, most particularly because they have little or no private pension (many of them were banned from joining private pension schemes when they were younger) and also have much lower state pensions than men, and partly because they are increasingly single due to rising divorce rates among older people. More women are now single in their 50s and 60s than before and cannot rely on a husband’s pension, so with much lower state pensions than men, many keep working.
4. Many older people are increasingly choosing to stay at work but try to work part-time so that they ease more gently into retirement. If they feel fit and healthy and want more money, and are able to work, they are choosing to do so. They are, therefore, embracing the ‘bonus years’ that I described in my article for the Times last week!
5. older women are rising, as the numbers in this age group also rise relative to the number of men.
6. The rise in long-term unemployment for over 50s is very worrying, but is hardly remarked on at all in the CIPD report. Of those unemployed in their 50s or 60s, a significant proportion have been out of work for over one year, much higher than other groups (46.8% of the men and 36.6% of the women). This is worrying, and may indicate ongoing age discrimination among employers who are reluctant to take on older workers. Many older unemployed people have commented to us how they are struggling to find jobs, with employers preferring younger people and finding ways to indirectly discriminate, since age discrimination itself is not allowed of course.
7. It is important not to draw misleading conclusions from these statistics and not to conflate demographic effects with economic effects. For example, suggesting that the age group 35-49 year olds ‘lose out’ in terms of employment is not necessarily accurate, since this is partly due to fewer of them in that group! The report does actually admit this on page 2, but fails to properly account for this impact across all the age groups. Notwithstanding this, however, I think there are actually some very interesting pointers here.
8. The trend to embracing ‘bonus years’ seems to be borne out by these types of figures. More people are working part-time in later life, as they try to retire gradually, rather than suddenly. This is much healthier and helps keep people in the labour market longer, which will be increasingly important for the long-term health of our economy.