3.5 million people aged 50-64 are out of the workforce, many of them in poor health and with few savings by the time they reach State Pension Age

Age UK warns this means any Government decision to accelerate the rise in Pension Age will condemn millions to a miserable and impoverished run up to retirement - and often beyond too

With over 3.5 million people aged 50-64 currently classified as ‘economically inactive’,[i] Age UK is warning that any move to increase the State Pension Age (SPA) earlier or higher than currently planned, could have devastating consequences for millions of people in their 50s and early 60s who are already struggling financially.

Age UK’s new analysis, published today to coincide with the launch of its new report[ii] ‘Waiting for an age: the real impact of raising the State Pension age’, shows that of these 3.5 million people, 1.3 million are sick and 0.5 million are caring for family and home.[iii]

In addition, many of the 3.5 million also have limited savings. Analysis by the Charity[iv] shows that 1.5 million (31 per cent) pre-SPA households[v] in Great Britain have savings[vi] of less than £5,000, and 120,000 (3 per cent) pre-SPA households have no savings at all. A total of 540,000 (11 per cent) pre-SPA households either have no savings or savings of £250 or less. This really matters because we know that people who are unable to work in the run up to their SPA often have to draw down savings put by their retirements, to make ends meet. If there are few or no savings to use then their prospects of a modest but dignified lifestyle during their pre-retirement years are bleak. They will also likely be condemned to penny-pinching retirements because the money they had saved to help bolster their incomes will have been spent.

In its new report Age UK explores the lives, circumstances, and views of people like these in their 50s and early 60s who will be reliant on their State Pension in retirement and who are likely to find it difficult to wait until 66 or later to receive it.

The State Pension age is currently 66 for everyone, having been 60 for women and 65 for men from 1948 until 2010. Under the current law, it will rise from 66 to 67 between 2026 and 2028, and then from 67 to 68 between 2044 and 2046. However, the law requires the Government to review the State Pension age every six years. The first review was published in 2017. At the time, the Government said that it intended to bring forward the rise to 68 to between 2037 to 2039, but that the decision would be made after the next review. This is now underway, with the Government due to publish its report soon, possibly alongside the Spring Budget. The report has to be made public, by May 2023 at the latest.

Because many people are in poor health[vii] by the time they reach the current SPA – the average healthy life expectancy in the UK is 62.8 years for men and 63.6 for women – the Charity is deeply concerned that having to wait until 66 is bringing great hardship and anxiety, particularly at a time when the cost of living is soaring.

Recent Research from the IFS supports this view as it revealed that increasing the SPA from 65 to 66 led to a more than doubling of the rate of poverty among 65 year olds, from 10 per cent to 24 per cent.[viii]  And worryingly, improvements in life expectancy have faltered while inequality seems to be increasing.[ix]

Through qualitative research, Age UK found that life is very difficult for many people in the 50-64 year age group who are in low-paid work or not in work at all. Some older carers are trying to juggle work and care, while others have had to stop working altogether to become full-time carers and have suffered financially as a result. Other people are unable to work due to ill health or disability, are currently working but struggling to keep going as their health deteriorates, or are finding it difficult to get a job again after a period out of the labour market.

Most of Age UK’s research participants were aware that SPA was around 66 or 67 but few had looked into exactly when they would receive their pension or how much it was likely to be. The reasons why the interviewees had not done more to find out about their pension included:

• A focus on simply getting by day-to-day on a low income – sometimes with additional pressures due to ill health or caring responsibilities.
• Fatalism that there was little they could do to change their current or future financial position.
• Avoiding thinking about retirement because of fear and other negative connotations.
• A gloomy expectation that if things change, they will change for the worse.
• Lack of knowledge about where to get trusted information.

Age UK believes there is no justification for further rises to the SPA at present given the uncertainties about life expectancies going forward. Its new report is based on qualitative research and feedback from people in the pre-SPA age group. In it, the Charity calls on the Government to focus on improving employment support and opportunities for those who can stay in employment until their SPA, and on providing better support for those who cannot. The report includes the following recommendations:

• For those who can work, the Government should deliver greater support, such as back-to-work support, as well as improving access to flexible working.
• There needs to be greater financial support for people approaching their SPA who cannot work. The Charity believes there is a strong case for early access to the full rate of State Pension for carers and ill or disabled people in some limited, clearly specified circumstances.
• There should also be changes to means-tested benefits to support a wider group of people on low incomes who are approaching their SPA, to ease their transition to retirement if they are unable to work or can’t find work.
• People need to be individually notified of any changes in their SPA at least 10 years ahead. There must also be at least a decade between any changes, and once people are within 10 years of SPA they should be given a clear commitment that it will not rise again.

Comments from research participants:

“I worked my whole life expecting my pension age to be 65 - now I find I will have to wait until I am 66 to get it! That extra year is going to be difficult as I am a full-time carer for my wife who has Parkinson’s disease. Of course, she also expected to get her pension at 60 only to find that she had to wait until she is 66 too!” [Campaigner, male, aged 65]

One woman interviewed was a care worker who worries about staying fit and healthy in order to support her family. She said, “caring is a tough job, you have to be fit enough to work’. Given the manual handling aspects of her work, she feels that carers should be able to retire earlier, because “after 65, it's going to be hard to do this type of work”. She does not feel it would be easy to get a different type of job in her mid-60s. [Interviewee, female, aged 54]

 Another woman who is 63 and works in a catering role in a school was also worried about how she will keep working. Her job involves six-hour days, in a physically demanding role. She is on her feet for most of her working day and is constantly “running around…”. She suffered a stroke nine years ago, but although her health has improved said “I have to know my limits…” She is increasingly concerned and stressed about her ability to continue in this job, saying “I would like to reduce things by a couple of hours, but it’s just not an option”. [Interviewee, female, aged 63]

“My husband is 60 and worked all his life since the age of 16 in construction. His back is shot, he is in pain all the time but like most self-employed people cannot afford to stop working (he would give up tomorrow if he could afford it) as he does not have any private pension. ……. I would love to see those sitting in an office making policy decisions go and work on a building site, lug around heavy cables etc, then maybe, only maybe they will realise those in manual work cannot continue to work to these long ages.” [Campaigner, female, 61-62]

Caroline Abrahams, Charity Director at Age UK, said: "There is no justification for raising the State Pension age at the moment, especially as we know that the people who will lose out the most are those unable to work due to ill health and caring responsibilities, as well as anyone with few or outdated skills and qualifications who becomes unemployed in mid-life and then finds it impossible to get another job, due in part to rampant ageism in the labour market.

“Life is really difficult for many who are unable to work, but not yet old enough to receive their State Pension.  When you consider that our research found a third of households aged 55-64 have savings of less than £5,000 you can see how precarious their finances really are. And with little if anything to fall back on and prices rising it must be deeply scary and a huge struggle just to make ends meet. You can understand why many in this situation put their heads down and just try to get by, and the idea that they might have to wait even longer before receiving their State Pension is unconscionable and frankly rather cruel.

“If you are lucky enough to be in a good job and have a substantial private pension then the State Pension, which pays on average only around £10,000 a year, is just a contribution to your overall income once you retire, most of which will come from elsewhere. In the run up to reaching your SPA you may be pondering working for longer if your job is stimulating and one that’s not too physically demanding, or that can be done flexibly. Conversely, for people like those we talked to for our research, that £10,000 potentially offers them a precious sense of security, and their retirement a longed-for opportunity to relax, often after having worked extremely hard in low paid jobs throughout their lives.

“Nothing could better demonstrate the level of inequality in our society and the importance of doing more to give those on the lowest incomes in this age group some hope. If Ministers decide to tinker with the SPA again as part of their review, and do so in favour of the State, this will definitely be a move in the wrong direction and a denial of social justice.

"Certainly, as things stand, and against the context of endemic ageism in the labour market, any decision by the Government to make today's fifty-somethings wait longer for their State Pension would be setting up hundreds of thousands of men and women for a miserable and impoverished few years in their run up to retirement – a kick in the teeth they could well do without.”

-Ends-

Ref: hs/amd/ew/lf/sw/cb/CA

Notes to editors:

Age UK’s new report ‘Waiting for an age: the real impact of raising the State Pension age’, explores the lives, circumstances, and views of people in their 50s and early 60s who will be reliant on their State Pension in retirement and may find it difficult to wait until 66 or later to receive it. The Charity commissioned 20 in-depth interviews in February and March 2022 with people aged 51-64 who were in low paid work; unemployed; had caring responsibilities; and/or had health conditions or disabilities. We also received feedback from nearly 1,500 Age UK campaigners aged 55-65 in June – July 2022.

 [i] ONS A05 SA: Employment, unemployment and economic inactivity by age group (seasonally adjusted), published 17 January 2023

[ii] Waiting for an age: the real impact of raising the State Pension age, Age UK, January 2023: waiting-for-an-age-report-january-2023.pdf (ageuk.org.uk)

[iii] Labour Force Survey, Economic inactivity by reasons, June 2021-June 2022, accessed via Nomis on 12^th January 2023

[iv] Age UK analysis of Wealth & Asset Survey Round 7 (2018-2020). Office for National Statistics, Social Survey Division. (2022). Wealth and Assets Survey, Waves 1-5 and Rounds 5-7, 2006-2020. [data collection]. 17th Edition. UK Data Service. SN: 7215, DOI: 10.5255/UKDA-SN-7215-17

[v] For the purpose of this analysis, ‘pre-SPA households’ are defined as households with a household reference person (HRP) aged 55-64. The household reference person (HRP) is the person that is the sole or joint householder or is responsible for household affairs. Where there are joint householders, the HRP will be the person with the highest income. In cases where income is the same for a joint householder, the eldest person is assigned as the HRP. ‘Savings’ consist of two elements: formal investments such as bank or building society current or saving   accounts, investment vehicles such as Individual Savings Accounts (ISAs), endowments, stocks and shares; and informal savings such as money under the bed or loaned to family or friends.

[vi] Savings consist of two elements: formal investments such as bank or building society current or saving   accounts, investment vehicles such as Individual Savings Accounts (ISAs), endowments, stocks and shares; and informal savings such as money under the bed or loaned to family or friends.

[vii] Office for National Statistics, Health State Life Expectancies, UK: 2018 to 2020, accessed here.

[viii] Institute for Fiscal Studies, ‘How did increasing the state pension age from 65 to 66 affect household incomes?’ Accessed here: https://ifs.org.uk/publications/how-did-increasing-state-pension-age-65-66-affect-household-incomes

[ix] The ONS reported that ‘Gaps in male life expectancy between local areas in the UK grew from 10.0 years in 2015 to 2017 to 11.6 years in 2018 to 2020; for females, it grew from 7.8 years to 9.6 years.’ Office for National Statistics, Life expectancy for local areas of the UK: between 2001 to 2003 and 2018 to 020, accessed here.