Is ‘50 PLUS: Choices’ a euphemism for the death of retirement?

interactive investor comments on government figures on people aged 50+ in work.

The Department for Work and Pensions this morning published Economic activity of individuals aged 50 or over, trends over time, showing:

• Employment rate for those between 50 and 64 has fallen from 72.1% in 2020 to 71.2% in 2021
• Number of over-50s working impacted by Covid
• Among those aged 50+, 600,000 jobs furloughed, equal to one-third of all workers on furlough - 34%; up from 31% at the end of May
• The employment rate for people aged 50 and over has been increasing since the mid-1990s
• Data suggests that while home working may help some older workers stay in the labour market, it has not been an option for all and ‘may entrench existing inequalities’
• The number of people aged 50 to 64 years in self-employment fell significantly from 1.7 million (18.5%) in 2020 to 1.6 million (17.1%) in 2021
• The average age of exit for women in 1950 was aged 63.9 years. It fell and reached its lowest point in 1986 at aged 60.3 years. Since then, the average age of exit for women has increased by 3.7 years to aged 64.0 years in 2021
• In 1950, the average age of exit of men was aged 67.2 years. In 2021, the male average age of exit from the labour market was 65.1 years, compared to aged 65.3 years in 2020.
• The data comes shortly after the publication of the Health and Social Care levy, which introduces a 1.25% charge on the income of those working past state pension retirement age from April 2023.

Becky O’Connor, Head of Pensions and Savings, interactive investor, the DIY pension platform, said: “The government has renamed the ‘Fuller Working Lives’ agenda to become ‘50PLUS: Choices’, which still feels like a euphemism for the death of retirement.

“Working in later life, particularly past state pension entitlement age, is more often likely to be a necessity rather than a choice. Although many people do like working if they are fit, well and have no other caring responsibilities, others would much rather be easing back and focusing on enjoying their later years.

“Covid has meant that many older workers who need income from employment have less money coming in. As well as affecting their current living standards, this will also affect their ability to continue to put money aside for eventual retirement.

“The hope is that this Covid-related trend will reverse, however that depends on employers re-hiring older workers. But it can be difficult to successfully apply for certain jobs once you reach a certain age.

“It’s really important that older people who both want to and can work have access to jobs, particularly as the state pension entitlement age has risen and so too will the minimum pension age in the coming years.

“It’s also important that those who cannot work, perhaps through health or caring needs, are able to keep their heads above water.

“Pensions are designed to get people through retirement – they might not be enough, after they become accessible in someone’s mid-50s, to meet financial needs through the end of their working life, too.

If older people who have lost jobs are now using some of their pensions instead, this could spell trouble further down the line, when they are trying to make their pot last. This makes it even more vital that people have access to information and products that helps them both build their pension through working life and preserve their pension through retirement.

“This data showing longer working lives comes after the introduction of the Health and Social Care levy – which will also hit older workers. So not only do more people have to work for longer, they have to pay tax for longer, too.”