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If the UK is going to make more people retire later, it needs to get creative

Dreaming of ways to retire.

The UK government has made a surprise announcement that the rise in state pension age to 68 is to be phased in from 2037, instead of 2044. Made just days before the end of an unusually troubled parliamentary session, it is concerning for a large part of the working age population.

The shelving of the previous timetable came only a day after the release of research findings that life expectancy in England is stalling – after 100 years of rises – with some experts linking the trend to the introduction of government austerity policies. Taken together with the respected Marmot review of 2010, which drew attention to the fact that the time we can expect to live in good health has not increased as quickly as life expectancy and that differences in health are strongly class-related, this makes the timing of the policy announcement particularly troubling.

People’s ability to work longer is driven by socio-economic inequalities more than politicians care to admit. The poorest off in the UK are much more likely to be forced into early retirement by declining health. This is, of course, exacerbated by the different physical demands of jobs, with lower paid jobs often involving more manual labour compared to those in higher paid professions.

Some jobs are harder to do when you get older than others. Joe Giddens/PA Archive/PA Images

Policy that takes a universal approach to extending state pension age will therefore exacerbate these differences in people’s working and retirement experiences. People whose health prevents them from continuing in jobs will be at increased risk of poverty in later life, their pensions prospects damaged by being forced into retirement earlier than anticipated.

The change will affect anyone aged 39-47, an estimated six million people who will now have to work for an extra year. It follows the Cridland report, an independent review of state pension age arrangements, published in March 2017, and the government has tried to frame the measure as enhancing equity between generations. It is anticipated to save the government £74 billion – counter-evidence to the narrative which has been developing post-election that austerity is being phased down.

The government’s position is currently far from stable, so the change may yet still be theoretical. The age group who will be most affected is a key electoral group for the Conservative Party. Research following the 2017 general election pinpointed 47 as the age at which support for Labour and the Conservatives crossed over. So this age group is not an obvious one for a minority government to penalise.

Changing world of work

State pensions in the UK were arguably set up to serve a very different demographic, with a much shorter expected period of retirement. Today’s ageing population is bringing into sharp relief the lack of a state model for pensions payment which accounts for this. Understandably, this vacuum is worrying for those affected by unanticipated changes to their pension planning. The government faces some serious challenges when it comes to reforming pensions and helping future generations have a good quality of life into their old age.

Plus, the world of work is changing. Careers and jobs for life are fast becoming the preserve of the lucky few, and it is difficult to predict what kinds of jobs we will all be doing in the next few years, let alone in decades’ time. For example, since World War II the proportion of the population employed in service industries has nearly doubled (from 44% to 85%), and those employed in farming has fallen from 5% to 1%. Meanwhile, technology is constantly changing the way we work, be it from home, conference calling with colleagues around the world, or in reconfigured open-plan offices.

Technology changes the way we work.

Lifelong training will play a key role if we are now to navigate the labour market for longer. If the world of work is constantly evolving, some of the key skills of the future will likely not yet exist, and workers will need to adapt to remain competitive. This will require a coordinated effort from both employers and policy makers to support people working for longer.

An increase in flexible work arrangements is also necessary, enabling older workers to manage working for longer at a time when there may be alternative demands on their time, pressing them to work differently. Their health may be changing and they may face new caring demands since these peak in the pre-retirement period, taking on care for their partners and parents. They may also be looking to balance this kind of work with a desire to look after grandchildren (a job in itself that could be recognised as work) or to pursue voluntary work.

Research has consistently shown more gradual transitions to retirement to be mutually beneficial for older workers’ health and employers’ workforce planning. Yet this is complicated by the relative lack of opportunity for part-time working in middle income posts.

Government has a strong incentive to support employers in making flexible work practices more routine, since workers who are forced to leave work before state pension age have consequences for social welfare and healthcare bills. This will be even more important if the state pension age rises again for future generations.

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