Raise retirement age to help UK recovery, says policymaker

In a speech published on July 26, Gertjan Vlieghe, a member of the Monetary Policy Committee of the Bank of England, suggested that keeping older workers in the workforce for longer could help provide a boost to the economy.

Vlieghe said: “Many countries, including the UK, are already slowly raising their retirement age, though it is by no means keeping up with the increase in longevity. The question is whether it can be increased more, sooner.”

He argued there was a case to consider removing any policies that encourage workers to retire earlier and instead create incentives, so that it is financially attractive for those who are able and willing to work, to keep doing so.

Vlieghe said: “The increase in the share of part-time work, and the flexibility to work from home, newly boosted by the pandemic, are likely to be helpful to keep older workers in the labour force for longer.

“The biggest increase in labour force participation over the past 15 years has been in the 50-64 age bracket, and the second biggest has been in the over-65 age bracket. We need more of that.”

However, he noted there would be consequences that would need to be taken into account, including that life expectancy varies with income. Also, not all jobs can be carried out by older workers.

The state pension age is currently set at 66. It is due to rise to 67 between 2026 and 2028 and once again to 68 between 2044 and 2046.

But a petition launched earlier this month is campaigning to have the state pension age lowered to allow people to retire earlier, thereby freeing up jobs for younger people who have been hit by the pandemic.

The petition page stated: “There would be a cost, however, surely a far more positive cost than paying universal credit? Not to mention the option of restoring the balance back into young people’s favour, and helping restore their future.”

The concern over shrinking job availability for older workers has been intensified by the pandemic, and while many over 50s want to work, their ability to do so is hanging in the balance.

Analysis of government data from over-50s community Rest Less, published on Sunday, found many over 50s want to work, but while the number of furloughed roles has fallen across all age groups, the proportion of over 50s on furlough has been steadily increasing this year, rising to 34 per cent in June from 27 per cent in January.

As the furlough scheme draws to a close, these over 50s could be hit by redundancies and cause a spike in unemployment levels, according to Stuart Lewis, founder of Rest Less.

He added: “Faced with the increased likelihood of long-term unemployment due to age discrimination in the recruitment process, many could find themselves forced into an early retirement they neither want nor can afford.

“For those less fortunate, that means potentially many years on job-seeking benefits before they can access the safety net of the state pension.”

He said more government support for dedicated retraining programmes was urgently required.

Meanwhile, the government is increasing the age at which people can access their pension under pension freedoms to 57 from 55 in 2028.

This article originally appeared on FTAdviser.com