Your IndustrySep 12 2022

Over 65s in employment reaches record level

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Over 65s in employment reaches record level
Pexels/RODNAE Productions

A record number of over 65s were still employed in June, highlighting the “biting reality” faced by those who simply cannot afford to give up work.

Between April and June 2022, the number of people aged 65 and over in employment increased by a record 173,000, to 1.468mn, according to quarterly Office for National Statistics data published today (September 12).

The ‘great resignation’ during the pandemic has been reversed and replaced with a ‘great unretirement’.Tom Selby, AJ Bell

This was driven by a 17.7 per cent uptick in the older generation entering part-time work, the ONS said.

Those who stopped working during the pandemic in the hope their retirement pot and any other assets would be enough to live on have clearly now found this impossible, according to AJ Bell’s retirement policy head, Tom Selby.

“We have seen the number of over 65s in the workforce surge by 174,000 this year, effectively reversing the ‘great resignation’ we saw during the pandemic and replacing it with a ‘great unretirement’,” said Selby.

While in some cases, returning to the labour market will be a good thing - eg, those who never wanted to leave their jobs during the pandemic - for others this will be forced, Selby added.

With rising living costs blowing a hole in people’s retirement plans, he said this leaves over 65s with no choice but to earn extra cash to supplement their pension.

“Some retirees, such as those receiving public sector pensions, will be lucky enough to have inflation protection baked into their incomes, [but] many will not,” he said.

Those with guaranteed defined benefit pensions from the private sector often have their inflation increases capped, and the majority of annuities people purchase have no inflation protection at all, he explained.

“Even those with inflation protection usually have limited increases. All of these people will therefore be facing a squeeze on their living standards.”

Interactive Investor’s pensions and savings head, Becky O’Connor, said the record rise in employment among over 65s shows that “reality is biting” for people who might prefer to be retired, but can’t afford to give up work.

“During the pandemic, when savings were high and people were forced to stay at home, we saw many people bring forward decisions to give up work, because retiring early felt achievable,” she said.

“But now that inflation is rampant and stock market returns are volatile, the tables have turned, the retirement numbers don’t quite add up and older people are taking a practical approach and returning to work in their droves.”

Over the years, she said it’s likely that more people will either have to or choose to try and find a balance between working and retiring and ‘flexi-retirements’ become the norm.

Some experts have highlighted the positives more over 65s in work could bring.

“Lots has been said in recent memory of a ‘brain drain’ in the older workforce so it is refreshing to see the most recent update from the ONS showing record levels of over 65s in employment,” said Canada Life’s technical director, Andrew Tully.

“Some older employees may enjoy the social side of working and are unwilling to leave it behind.”

But Tully acknowledged for others, the rise will be because they may not feel financially stable enough to retire completely.

“Supporting a workforce goes beyond just considering attracting talent particularly during the cost of living crunch we are all experiencing,” said Tully.

“Employers must consider how they can retain existing staff, no matter what their age.”

ruby.hinchliffe@ft.com