The great ‘unretirement’ gathers pace

The ONS data showed a decline in the number of older workers leaving their job to retire over the past year - a drop that has also been attributed to the cost of living crisis.

There are also around 460,000 people aged 50 to 64 years who are economically inactive but say they are willing to, or would like to, work.

Stephen Lowe, group communications director at retirement specialist Just Group said more older workers are seeking work to bolster their financial position both in the short-term and looking ahead to retirement.

“This can be seen in the decline of older workers who left their last job to retire falling from 37 per cent in 2022 to 34 per cent in 2023 as the ‘great unretirement’ seems to be picking up pace. It suggests people nearing retirement are keen to continue working to build up bigger pension savings and protect against financial threats like the rising cost of everyday living.”

“There is clear potential to be harnessed among this generation of silver workers who bring significant experience to the workforce. Nearly half a million economically inactive older workers say they would like a job so evidently a keen and willing talent pool exists for employers.

 “The slow recovery in employment for this age group is concerning because this is the time of life where people tend to focus on retirement planning and extra pension saving. If they are struggling to find jobs that will have a knock-on effect on both their own retirement plans and potentially mean more State support will be needed.”

Richard Carter, head of fixed interest research at Quilter Cheviot said the ONS figures meant the number of over 50s in the UK workforce increased by just 0.6 per cent over the last year following drastic falls during the pandemic.

He said: “With the state of the economy fast becoming the number one issue as we head towards the start of election campaigning, the Conservative government has its work cut out to boost productivity and has been pulling out increasingly desperate measures to lure this age group back to work as a result.

Carter pointed out the Chancellor’s budget earlier this year included major changes to pensions allowances, with the Money Purchase Annual Allowance increasing from £4,000 to £10,000, for example, making it more worthwhile for those who have already accessed their pension to return to work.

“While the fall in the employment rate has been broken, it appears these incentives alone will not be enough to provide the uplift the government is after. Just this week the government came under fire for its new plans to drive more people claiming sickness benefits back to work through a more stringent assessment process.”

Why time is running out

“This release shows being sick, injured or disabled remains the primary reason for economic inactivity, cited by 42.3 per cent of older inactive adults, so despite the heavy backlash it has faced, it may feel its plans are justified. These plans would not come into force until 2025 so if Labour wins the election, it would have to decide whether to move ahead with the controversial changes.

 “The rate of economic inactivity for this age group has also decreased in the last year, falling by 0.8 percentage points from 27.4 per cent in 2022 to 26.6 per cent in 2023.

“While this is a positive, both this change and the employment rate uplift may solely be due to people being forced to return to work to make ends meet given the higher cost of living as opposed to the government’s efforts. Ultimately, these efforts are not working as had been intended, and the current government is rapidly running out of time to make meaningful change ahead of the election.”

Worrying for women

Sarah Pennells of Royal London said the data revealed some concerning trends for women.

“The employment rate among women aged 50 to 64 years with no qualifications is 20.5 percentage points lower than that of men of the same age with no qualifications, whereas there is only a 2.5 percentage point difference in the employment rate of men and women for those with degree level education.”

She said there is also a stark difference in the number of women aged 50-65 who cite looking after home or family as their reason for not working in comparison to men.

“More than a fifth (20.9 per cent) of women said that that home making and caring commitments were stopping them from looking for work compared to fewer than six per cent of men (5.8 per cent).

“Although there’s been a significant increase in the number of women in work over the last 70 years, the age at which women are stopping working has not changed. In 1950, the average age at which women stopped working was 63.9 years old, compared to 64 years today.”

However, the age at which women become eligible to receive their State Pension has increased from 60 to 66, which presents a challenge to ensure they have sufficient savings to fund their retirement.

 “State pensionresearch carried out by Royal London shows that while one in five people who are old enough to receive the State Pension rely on it as their only source of income in retirement, almost three in ten women do.

 “Women who want to retire earlier than 66 need to have a plan in place so they can do so. However, almost three quarters of women have never worked out how much they’ll need in retirement.”