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:
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: