Why the rising state pension age is a double-edged sword
Without the right support, further increases to the state pension age will worsen the price that older workers pay for an ageist labour market.
The rise of the state pension age to 66 has successfully induced more people to keep working past 65, meaning many individuals will be reaping the financial benefits of these extra earnings. However, another likely and far less positive consequence is deepening inequalities between those who can and cannot work in their mid-60s. If the government is serious about continuing to increase the state pension age, then they must get equally serious about ensuring that everyone has access to decent employment, and back-to-work support for people who have fallen out of employment in their 60s. Without that, further increases will simply worsen the price that older workers already pay for an ageist labour market.
There have been many positive aspects to a raised state pension age. For many people still in work at 65, this has been an extra year of income and to further build savings for retirement. Employers, many of whom are experiencing acute skills shortages, are equally benefitting from these older workers’ experience. As a direct result of the increase in state pension age there are 25,000 more men and 30,000 more women aged 65 in the labour market, new research funded by the Centre for Ageing Better and conducted by the Institute for Fiscal Studies has shown.
That said, little more than a third of people are still in work at 65. The increase in state pension age means that 25,000 more 65-year-olds are out of work due to ill-health, and 5,000 more looking for work. If given the right support tailored to their individual needs, many in this group could re-enter the labour market, boosting their income and savings. Employers too stand to gain substantially from tapping into this pool of highly experienced workers.
Without age-friendly recruitment practices, employers and individuals risk missing out on the opportunities that an ageing workforce could bring in boosting productivity and filling ever-increasing skills shortages.
We also need to recognise that while many stand to gain from an extra year of work at age 65, not everyone can continue to work until their state pension age. The government must consider what financial support should be offered to those for whom work is simply not an option, because these are the people who are currently most disadvantaged by the raising of the state pension age.
Those who find themselves out of work in their sixties who cannot afford retirement, their options for getting back into work can be limited. More than a third (36%) of older jobseekers feel disadvantaged when applying for jobs due to their age, and many employers’ recruitment practices are unfairly skewed in favour of younger workers. Many older prospective employees navigate recruitment processes far removed from the last time they were job seeking, and as a result do not know where to turn for advice.
We know there is much more employers can do, but government must take the lead in opening the labour market to more older workers – not only by holding employers to account on age diversity, but also committing to tailored back-to-work support for over 50s who are out of work. Such support must consider their everyday lives and responsibilities and recognise the unique challenges that older jobseekers face. Without this, and without age-friendly recruitment practices, employers and individuals risk missing out on the opportunities that an ageing workforce could bring in boosting productivity and filling ever-increasing skills shortages.