More people aged 50 to 64 are working than ever before – but they need better Government support to deal with caring responsibilities, says experts
The over-50s are being urged to stay in work for longer to boost their pension pots and the UK economy.
Major changes to the state pension age and access to private pensions coming in two years are expected to keep more people in employment in their 50s and 60s.
But it comes as this generation is also under increasing pressure to take on more caring responsibilities – for both their own grandchildren and older relatives who are living longer but are in poor health.
Ministers want to encourage older workers to remain in employment after Cabinet Office analysis said boosting the “silver economy, specifically catering for older adults, could drive innovation, export opportunities to other ageing economies, and generate employment opportunities”.
Ageing populations around the globe have created a market for new products and services catering to the needs of the over-50s demographic, including specialised health and wellbeing, easy-to-use smart technology and tailored leisure, travel and entertainment.
Keeping this age group in work for longer could help boost their spending power in retirement, the productivity of the firms who employ them, and the economy as a whole.
Research shows that the over-50s can often be more productive than their younger colleagues, and can bring different skillsets to teams including better communication, superior problem-solving and calmness.
Working longer is vital to fight pensioner poverty
But experts warned that Sir Keir Starmer’s Government has to do more to protect older employees from ageism in the workplace, and that people in their 50s and 60s unable to work due to health issues need better support to encourage them back to the office.
A House of Lords committee warned last month that the Government needed to make it a “priority” to help the over-50s stay in work – including offering more flexible hours and getting to grips with the social care system.
The Lords economic affairs committee said: “The greatest improvement in fiscal outlook will… come from encouraging and incentivising those in their mid-50s to mid-60s to remain in or return to work.”
It added that this would also “help prevent increases in pensioner poverty which, without any postponement of the age at which people stop working, can only be expected to increase as people live longer”.
Lord Wood of Anfield, the Labour chairman of the committee and a former Downing Street adviser to Gordon Brown, told The i Paper: “From 50 to 64, millions drop out of or reduce their work, for a range of reasons – family caring demands, inflexible work practices and difficulties in returning to work after losing their job.
“Tackling this problem of reduced working would have beneficial effects in terms of tackling pensioner poverty, pension inequality, health outcomes for older people, productivity & improving the nation’s finances.
“The Government could explore policy options ranging from financial incentives to expanding flexible work for older workers.
“But the single biggest boost for higher participation in work among over-50s would be the implementation of a national care system that would relieve pressures on workers in their 50s to reduce or quit work in order to care for their loved ones.”
Mid-life MOTs, one-to-one support and extra study
Starmer’s Government has a range of policies designed to keep older employees working longer.
These include Connect to Work, which offers one-to-one support for people of all ages with disabilities or health conditions to help them back into the workplace and the launch of the Lifelong Learning Entitlement in September, which will allow people of any age to take on extra study to boost their job prospects.
The Department for Work and Pensions (DWP) also offers midlife reviews for workers to re-evaluate their skillsets, and help for older women forced to take time off due to menopause symptoms.
The Midlife MOT allows users to obtain a shortlist of work, health and money resources.
Some businesses offer incentives to the older workforce under their own steam, such as tailored physiotherapy, flexible hours and retraining schemes.
A DWP spokesperson said its reforms would “boost employment for people of all ages by overhauling Jobcentres and providing personalised work and skills support.
“We provide dedicated support to older workers via midlife reviews that encourage people to evaluate their skills, while our Menopause Employment Ambassador [Mariella Frostrup] is collaborating with employers to enhance workplace support for women experiencing menopause symptoms.”
Policies must go further, experts say
Dr Andrea Barry, of policy and campaign group the Centre for Ageing Better, said that while the Government had rightly identified an issue with employment opportunities for those aged 16 to 24 and brought in the Youth Guarantee to get this group into employment, education or training, it needed to prioritise older employees too.
“Both groups of workers have much lower employment rates than the 25 to 49 age group, and both groups have their capability and value in the workforce unfairly questioned just because of their age,” Barry said.
She urged ministers to take an “age-positive” and “age-targeted” approach, with employment support specifically “tailored to the needs of 50-plus people”.
One of the biggest reasons for people leaving the workplace in their 50s and 60s was age discrimination, Barry added: “Ageism is the most widespread form of discrimination in the UK, and yet it feels like it is the least discussed.”
What does this mean for your pension?
The state pension age will rise to 67 in 2028, and the age at which you can access private pensions will increase from 55 to 57 that same year.
Research by the Institute for Fiscal Studies found that the most recent state pension increase (from 65 to 66) led to around eight in 100 (55,000) more 65-year-olds being in paid work. There were especially big increases in employment rates in more deprived areas of the country.
Steve Webb, partner at pension consultants LCP and a former Lib Dem pensions minister, said: “Individuals who work for longer have more chance of building up a full state pension and it means extra years when their employer is paying into a workplace pension.”
Putting off drawing down on your pension would make it last longer and allow this to be done at a faster rate after retirement, he added. “With the state pension age set to rise to 67 by 2028 and further increases on the cards, it will be increasingly difficult for people to drop out of work in their 50s,” he said.
“Doing so could leave them a decade or more dependent on very meagre benefits as well as undermining their future pension prospects – so it is in the interests of individuals to work longer if they can.”
Given the age at which people can access a private pension will rise from 55 to 57 overnight on 6 April 2028, “it is likely to be in your interests to be piling money into your pension in your 50s rather than taking it out”, he added.
What older people offer the workplace
A 2020 report by the OECD found that firms whose share of workers aged 50+ was 10 percentage points higher than average had around 1.1 per cent higher productivity.
Professor Sarah Harper, director of the Oxford Institute of Population Ageing, said the employment rate of people aged between 50 and 64 in the UK has increased over the last 40 years, from just over half to 70 per cent – in part due to improved health in the over-50s.
She added: “Retaining the experience and knowledge of mature workers when combined with younger workers can lead to the increased overall productivity which mixed age-teams and groups bring.
“While there still remain myths and stereotypical views that older people are unproductive, current data suggests that the over 55s now have higher productivity than those workers under 25.”
Professor Harper said older workers had “enhanced verbal capabilities and communication skills, advanced inductive reasoning and superior problem-solving abilities”.
Barry, from the Centre for Ageing Better, added: “Studies have shown that multi-generational workforces are more productive and innovative.”
Remaining in work was also good for the individual, she said. “Beyond the obvious financial implications, being in work offers a sense of purpose, it brings cognitive stimulation, it offers challenges and it provides the opportunities to feel part of a team and daily social interaction.”
Why it matters to the UK economy
Laurence O’Brien, senior research economist at the Institute for Fiscal Studies, said: “Boosting employment among people in their 50s and 60s would, all else equal, raise economic output: more people in work means more is produced.
“It would also improve the public finances through higher tax receipts and lower benefit spending. There may also be productivity benefits if experience and skills are better used and shared within workplaces.
“That said, whether higher employment at older ages is a ‘good news’ story for society depends on what’s driving it. If it reflects better health, better job matching, and more flexibility (including access to good part-time work), that’s clearly positive.
“If instead people are working longer mainly because they can’t afford to retire when they would like to, the implications for society are less clear even if GDP is higher.”
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Dr Barry said that closing the employment age gap of 13 percentage points between the 50-64 age group and the 35-49 age group could boost the economy by as much as £9bn a year, with an additional £1.6bn a year in income tax and national insurance contributions to the Treasury.