Number of older workers shoots up by a third as pandemic bites and uncertain financial future looms for the next generation of pensioners
Published on 09 December 2020 12:01 AM
Age UK calls for early access to State Pension for those nearing State Pension Age and a reduction in the age of eligibility for crucial money benefits to help the most disadvantaged
With more than 340,000 people aged 50 – 64 years now unemployed[i], an increase of almost 85,000 on the last quarter (April – June 2020)[ii], Age UK is urging the government to help those at risk of long-term unemployment in the run-up to receiving their State Pension.
The Charity is warning that with current vacancies in short supply a perfect storm is on the horizon for many over-50s working in sectors badly affected by the pandemic. Even in a buoyant job market systemic ageism can make it extremely difficult for many unemployed older people to find work. Covid-19 has made unemployment an issue across all generations, however for a substantial number of older workers – especially those in their 60s – the pandemic could spell the end of their working lives, with high numbers being made redundant or feeling forced to choose between their jobs and their health or caring responsibilities, leaving them facing an uncertain and rocky financial road to State Pension age (SPA).
In a new report by the Pensions Policy Institute (PPI), Longevity Inequality – sponsored by Age UK and published today – the widening inequality gap between rich and poor in later life even before the pandemic hit is laid bare. The report shows that in the five years between 2012 and 2017, the difference in life expectancy between the most deprived and least deprived individuals (men and women) grew by eight per cent.[iii]
Even with the Chancellor’s recent announcement of the new ‘Restart’ scheme[iv], Age UK warns the Government must ensure the new scheme along with Jobcentre Plus delivers the support that older jobseekers need to get back into work.
With SPA currently at 66 and due to rise to 67, coupled with a further review of the SPA due by 2023, Age UK is calling for urgent government action to safeguard the financial futures of unemployed older workers who are facing a long and difficult wait for their State Pension:
- Early access to the State Pension for those within three years of their State Pension age (SPA) who are unlikely to be able to work again due to caring responsibilities, a disability, or long-term joblessness.
- The age of eligibility for vital money benefits such as Pension Credit and Housing Benefit lowered to help all older people struggling to manage on a low income. Additionally, take-up should be encouraged to help the millions of older people currently missing out on Pension Credit worth £1.6 billion a year.[v]
- Back-to-work support and access to training must be ramped up by the Government to help all unemployed or struggling older workers to find a way back into the workplace.
Current government policy is to increase SPA to ensure that individuals, on average, spend approximately a third of their adult life in receipt of their State Pension. Yet the new PPI/ Age UK report sets out how a single SPA can be hugely problematic for those on the lowest incomes, showing that even in non-pandemic times, many older people struggle to make it to SPA through no fault of their own.
According to the report, around 50 per cent of those reaching retirement are expected to live long enough to spend a third of their adult life in receipt of SPA.[vi] However some segments of the population can expect significantly less of their adult life in receipt of the State Pension. Whilst those on lower incomes are invariably more reliant on the State Pension – currently half of pensioners derive nearly two-thirds (64 per cent) of their income from the state[vii] – a lower life expectancy means they receive it, on average, for much less time than their wealthier counterparts. In fact, men in the lowest ten per cent receive the State Pension for just over a quarter of their adult life (26 per cent), compared to those in the highest 10 per cent who receive it for a third of theirs (33 per cent) – a difference of six years.[viii]
Caroline Abrahams, Charity Director at Age UK, said: “It’s deeply worrying that there are so many older people falling out of work and struggling to get back in. With the unemployment rate across all generations shooting up, we need urgent action from the Government to help – they must ensure that the new ‘Restart’ scheme and Jobcentre Plus are delivering the support that older jobseekers need and ensure they are not left on the scrapheap.
“The pandemic looks likely to cause lasting damage to the labour market, leaving many older workers unexpectedly facing a deeply challenging and uncertain future. Unless measures are brought in quickly to help them keep their jobs and to support those who lose them, it seems certain that hundreds of thousands will soon be staring prolonged unemployment and premature retirement in the face.
"This new report shows just how much inequality there is among older people, even before the pandemic took hold - an important reminder that the differences in income and wealth within generations are greater than those between them. Given the impact of the pandemic on the jobs market, we strongly believe that it is only fair for some groups who are within three years of their State Pension age to have early access to their full State Pension. We are thinking particularly of people who are never likely to be able to work again because of caring responsibilities, a disability, or because their chances of getting another job are particularly slim. Furthermore, the Government should also lower the age of eligibility for benefits such as Pension Credit and Housing Benefit to support these older people. Action of this kind would have multiple benefits."
“Unless the Government takes bold action, hundreds of thousands of older people could face a dire end to their working life and a long, painful road to retirement.”
Chetan Jethwa, Policy Modeller at the Pensions Policy Institute, said: “On average, people are living longer within the UK. However, the increases in life expectancy are not shared equally among the population. Shifts in healthy life expectancy are also distributed unevenly among the population. The briefing note highlights the changes to inequalities linked to depravation in life expectancy and healthy life expectancy. People with the lowest incomes are less likely to recover from physical difficulties, making it more difficult for them to work, save and prepare for retirement over the later stages of their working lives. Policies targeted at this inequality during working lives could reduce the impact is has on people’s retirement.”
[i] In the three months to September 2020 there were over 340,000 people aged 50 to 64 who were unemployed, an unemployment rate of 3.6%. Source: Office for National Statistics (10th November 2020). Table 2, A01 Summary of labour market statistics. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/november2020/relateddata
[iii] Office of National Statistics (ONS) (2020), Health state life expectancies by Index of Multiple Deprivation (IMD 2015 and IMD 2019): England, all ages
[vi] Pensions Policy Institute (PPI) (2017), How long will people spend in receipt of the State Pension?
[vii] PPI analysis of the English Longitudinal Study of Ageing (ELSA) wave 8—2016/17
[viii] Pensions Policy Institute (PPI) (2017), Contributions into the State Pension system versus receipts for people of different income and employment profiles, Table 3
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Notes to editors
We work with our national partners, Age Scotland, Age Cymru and Age NI and our local Age UK partners in England (together the Age UK Family). We also work internationally for people in later life as a member of the DEC and with our sister charity Help Age International.
Age UK believes that everyone should have the opportunity to make the most of later life, whatever their circumstances. We provide free information, advice and support to over six million people; commercial products and services to over one million customers; and research and campaign on the issues that matter to people in later life. Our work focuses on five key areas: money matters, health and well-being, home and care, work and training and leisure and lifestyle.
Age UK is a charitable company limited by guarantee and registered in England (registered charity number 1128267 and company number 6825798). Age Concern England and Help the Aged (both registered charities), and their trading and other associated companies merged on the 1st April 2009. Together they have formed the Age UK Group ("we"). Charitable services are offered through Age UK and commercial products are offered by the Charity's trading companies, which donate their net profits to Age UK (the Charity).