Policy makers have been warned that delaying the pensions age until 70 or introducing other financial incentives for people to work longer will achieve little unless other barriers to older people staying in the labour market are removed.
A new report from the Joseph Rowntree Foundation (JFR) says that Britain’s expanding population of 50- and 60-year-olds need more choice and control over their work and retirement options and warns against ‘one-size-fits-all’ prescriptions as more post-war ‘baby boomers’ approach retirement age.
But the Foundation also argues that policy measures to enable more people to continue working past retirement age do not mean forcing everyone to ‘work until they drop’.
Drawing together the findings from twelve different research projects on the transition between work and retirement, the report notes that despite the fact that people are living longer, they are also quitting the workforce at a younger average age (although not necessarily at a time of their own choosing).
Since people over 50 are set to become an increasingly important economic resource as the supply of younger workers declines, the government and employers urgently need to change their attitudes to older workers and the contribution they can make.
In particular, the report says, financial incentives introduced to encourage later retirement will achieve little unless other barriers to older people staying in the labour market – such as training and career development activities that are still skewed towards younger workers - are removed. These include not only age discrimination by employers, but also negative attitudes to work among older workers themselves that leads them to feel undervalued and that they have little left to contribute.
According to the JFR’s Special Advisor, Donald Hirsch, “what will not work is simply to create financial ‘incentives’ to work longer. For example, if we were to delay pensions until 70, without a huge change in current working patterns and opportunities, the result for many poorer people would simply be to prolong out-of-work poverty."
The picture painted by the report of the circumstances and aspirations of people over 50 is one that varies widely. Some, but not all, would benefit from retiring later. And since money considerations tend not to be the main reason behind their decisions to stop working, it is unlikely that a simple policy of financial incentives to encourage later retirement would do much to alter behaviour.
But many workers leaving jobs before state pension age have little option about the timing of retirement. Those in professional and managerial jobs tend to enjoy greater choice and control over how and when they leave the workforce than those in less privileged occupations.
People’s retirement preferences are also influenced primarily by health and family circumstances, combined with the view they take of their job. Financial factors are most often felt as a constraint, determining whether retirement at a preferred time is really affordable.
But significantly, almost as many people who leave their career jobs before retirement age can be found working part-time, or in temporary or self-employed ‘bridge’ jobs a year later, as are fully retired.
The most attractive and lucrative ‘bridge’ job options, such as consultancy work, tend to be taken by men who were well paid and well qualified in their previous career. Women more commonly take up part-time work after leaving their ‘main’ career, and frequently at lower rates of pay.
But it is also clear that a high proportion of men and women workers over 50 have caring responsibilities for older relations. As the pressures to continue working beyond retirement age increase, there is a risk that the availability of informal, family care will diminish, putting professional caring services under extra strain.
Another barrier identified by the research is a lack of opportunities for many workers to adjust their working hours or terms of employment as they grow older – partly through fear of losing pension entitlements. Employers and government could both do far more to promote flexibility and increase the options for older workers who do not want to exchange their full-time careers for total retirement.
Donald Hirsch continued: "The Government and society have become much more open to the idea of ‘work-life balance’ in the case of parents and young children. This idea needs to extend more clearly to include older workers, many of whom have caring and other family responsibilities.
"A first step would be to extend legislation so that all workers have the right that was recently given to parents with young children to ask their employers for part-time and other flexible working options. Another key task will be to make work more worthwhile for older people.
And he added: "“The reality revealed by the JRF research programme is that some older workers would like the option to pursue their career for considerably longer.
"Others are delighted to leave work as soon as they can, while a third group would regard a switch to self-employment or part-time work as the best option and halfway-house."