According to a new report by the International Longevity Centre (ILC), anyone born in the UK after April 1970 could be required to work until age 71. The UK state pension age increase is a contentious policy addressing the country’s labour crisis and ensuring economic sustainability amid an ageing population.
This move, however, risks exacerbating financial difficulties for older citizens, who are already struggling due to a cost-of-living crisis, reduced work motivation post-COVID-19, and inadequate retirement savings. With the UK’s population projected to grow substantially and pension costs expected to reach £138 billion by 2024, policymakers face the challenge of balancing economic demands with the well-being and resilience of the elderly.
Reducing the motivation of older people to return
The Covid-19, combined with years of austerity and rising death rates, means a temporary easing of pressure on pension funds. However, COVID-19 led to inactivity and reduced the motivation of older citizens to return to the workforce after quarantine. UK state pension age increase can anger older people who no longer want to continue working.
ONS forecast of UK population
The UK population is expected to grow from around 67 million in mid-2021 to 73.7 million in mid-2036. So, the UK pension benefits cost will reach £138 billion between 2023 and 2024. £125 billion of this amount will be spent on state pensions. At the same time, part of it is spent on housing allowances for retirees and retirement credits for low-income people.
Labour Crisis in Britain
The increase in the UK state pension age is due to the labour crisis in this country. The current state pension age in the UK is 66 and is likely to rise to 68 by 2044. A gradual increase in this age is necessary to maintain the current situation of a fixed number of workers for each pensioner. If the ratio of retirees to workers increases, there will be a shortage of workers to meet consumption demand.
Early retirement in the UK
Considering early retirements, the ILC noted that many UK workers leave the workforce early because of preventable health conditions. Currently, only 50% of adults in England and Wales are disabled and able to work by the age of 70. Therefore, taking care of employees’ health before it worsens should be a priority for governments. The report emphasizes that policymakers can no longer ignore the impact of poor health on the wider community. This neglect renders broader work or retirement policies ineffective.
A significant increase in workers over 70 years old
The cost of living has led to a rise in the number of people over 70 who still have to work. The number of Britons over 70 who still go to work has increased by 61% compared to a decade ago. In its research, Rest Less found that in 2022, 446,601 Britons over 70 were employed. Meanwhile, the number recorded in this field in 2012 was 277,926 people.
A significant increase in elderly women workers
Men still make up most of the workforce over 70, but the increase of female workers in this age group has been more significant. The reason for that was the implementation of the gradual equalization of the retirement age between 2010 and 2020. Until now, British women could retire five years earlier at 61. Currently, the retirement age for both men and women in the UK is 66, but this age is set to rise to 68 by 2046.
The impact of the cost of living crisis on increasing the retirement age
Stuart Lewis, a founder of Rest Less, explained the company’s research results: ” Until COVID hit and life expectancy dropped for the first time in a decade, more people were reaching their state pension age than ever before, which meant there were more experienced people in the workplace than ever before, too.” He added that many people who work after retirement have no choice but to do so.
The anger of older people over the increase in the retirement age
UK state pension age increase has angered older people. The financial crisis has made the UK one of the worst performers among developed countries in this regard. The UK government’s decision to increase the retirement age will anger people and be like a ticking time bomb.
The negative effect of raising the retirement age on the popularity of conservatives
UK state pension age increase will decrease the popularity of conservatives. After about 14 years of government, the Conservatives have suffered a popularity crisis. Polls show that the British will vote for Labor in the upcoming general election. Rishi Sunak misunderstood the dire economic conditions of the British and took actions that aggravated the financial crisis. Many conservatives do not agree with the actions of the British government. According to them, ill-considered policies can reduce the political credibility of the conservative party.
A decline in the actual value of British household income
The cost-of-living crisis in the UK in 2021 followed. The rate of inflation and the increase in the price of essential and primary goods in the UK exceeded families’ income, decreasing the actual value of family income. Other factors contributed to the dire economic conditions in the UK and the sudden increase in inflation. The Covid-19 pandemic and the sanctions imposed on Russia have worsened the economic conditions in the UK.
Lack of economic resilience of British retirees
The UK state pension age increase means older people need more economic resilience. Today, many older workers struggle to make ends meet amid the cost-of-living crisis. British pensioners need more retirement savings, so they must work to survive financially.
