The study, authored by Les Mayhew, part-time Professor of Statistics at Cass Business School, showed that economic activity deteriorates once individuals reach 50 – and does so rapidly from 55.
He said: “A major cause of inactivity is ill health, and disabling conditions increase with age.
“So, raising the state pension age is not enough to mitigate the adverse impacts of ageing on the economy and people’s capacity to earn and save.”
The government announced in July that the state pension age increase should be brought forward to 68 between 2037 and 2039, due to increases in life expectancy.
Under the current law, the state pension age is due to increase to 68 between 2044 and 2046.
The change to the state pension age will leave 7.6 million people £10,000 worse off, according to analysis by the House of Commons Library.
According to Mr Mayhew, the key challenge for policy-makers, shared with the private sector, is to “seek ways to improve economic activity rates between the ages of 50 and 70”.
He said: “This includes public policy initiatives to prevent or delay the onset of ill health, employers’ efforts to create more opportunities for workforce participation, and financial services products that mitigate the effects.”
Gender variations in total life-time earnings remain substantial, with men earning – on average – 80 per cent more than women. This has a knock-on effect on their respective pension prospects.
CSFI’s report recommends that working partners should be able to contribute to the pension funds of non-working partners, with the recipient also benefiting from tax relief on these contributions.
The research also suggests that new financial products, akin to care annuities, could be developed to assist those in the ‘sandwich years’ – a growing phenomenon that affects women disproportionately as caring responsibilities for children and elderly relatives overlap.
Adrian Boulding, director of policy at workplace provider Now: Pensions, agrees that more should be done to tackle the inequality in pension savings.
He said: “When we look at our own member base, this divide is already visible. Over half (57 per cent) of our member base is male and their average fund size is £424, while women have £334.
“This gap persists but grows wider for women over the age of 30.”
One of the reasons for this gap is that many women earn less than the auto-enrolment trigger of £10,000, many of them due to being part-time workers, he argued.
He said: “All workers should have an equal opportunity to build an adequate pension pot and where there is inherent inequality, steps need to be taken to address this.
“Removing the auto-enrolment trigger would bring 3 million more people into pension saving, the majority of whom are women. Basing auto-enrolment contributions on every pound of earnings, as recommended by the 2017 auto enrolment review, would benefit all savers but particularly low earners who are more likely to be women.”
The Department for Work and Pensions (DWP) announced in December that is making changes to the age for auto-enrolment of workers into workplace pension schemes from 22 to 18-years-old, and changing the way pension contributions are calculated.
William Burrows, retirement director at Better Retirement, agrees with the main conclusion of the report.
He said: “The issues involved in dealing with an ageing population transcend pensions. Money is important, especially having enough to enjoy retirement, but quality of life is also important.
“I think it is about being ‘secure and well’. If we can get the money bit right so people have enough money in retirement, it is easier for people to live their life well.
“However, there is no escaping the need for people to save more themselves as the state pension will slowly be pushed back over time.”
maria.espadinha@ft.com
