With 3.5 million 50 to 64-year olds out of the workforce, many in poor health and with few savings, Age UK is warning that 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.
They say 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 ‘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.
In addition, many of the 3.5 million also have limited savings.
Analysis by the Charity shows that 1.5 million (31 per cent) pre-SPA households in Great Britain have savings 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 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.
The State Pension age is currently 66 for everyone; 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 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. And worryingly, improvements in life expectancy have faltered while inequality seems to be increasing.
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.
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.