Although one feature of the pandemic years has been the so-called Great Resignation where large numbers, particularly of the over 50s, voluntarily left the labour market, signs of a reversal of this trend are emerging due to the cost of living crisis.
Life expectancy continues to increase even if the pace of growth has diminished. And for most, this is a longer healthy life. Although significant future increases in the over 65s are projected, there will be little growth in younger age cohorts. These demographic shifts, combined with skills shortages, will encourage employers to look outside their traditional recruitment pools, with older workers an obvious pool of labour to fill those gaps. This Future of Work Hub podcast considers whether it might be time to retire the word “retirement”.
Actual retirement ages in the UK had increased in recent years up to the beginning of the pandemic but were still well below the actual retirement ages of the early 1970s. The first state pension was introduced in 1908 at age 70 and, at that time, only one in four people reached that age with life expectancy at around nine years. The system was replaced by a revised scheme in 1925 under which state pension was payable from the age of 65. Life expectancy of women at 65 in 1925 was around 13 years and for men it was around 11 years. It has nearly doubled in the UK in the intervening years. To have kept pace with increasing life expectancy the state pension would be payable today at around the age of 76 at which age life expectancy is now around 12 years. The state pension age is set to rise, currently to age 68, for those born after 5 April 1978.
The government is under a legal obligation to review the state pension age every six years. Regardless of the government in power, further rises to the state pension age look likely as people continue to live longer healthy lives.
The Great Resignation saw many people reassess their life choices and leave the labour market. However, rising prices and stark predictions of the numbers of pensioners who will struggle to make ends meet will no doubt place pressure on over 70 years olds to continue working or go back into employment where pensions savings turn out to be inadequate as a result of high levels of inflation and the cost of living crisis. Recent studies suggest that a significant number of those who left their job, particularly those over 50 years old, are now considering a return to their former employer, shifting the conversation towards talk of the “Great Return”.