Increase in economically inactive adults ‘nothing to do with retirement’ - LCP

The increased number of economically inactive working age people has “nothing to do with retirement from paid work”, LCP partner, Steve Webb has stated.

These comments follow a statement from the Chancellor of the Exchequer, Jeremy Hunt, who said that 630,000 more working aged people had become economically inactive since the start of the pandemic.

Speaking at the Association of Member Nominated Trustees (AMNT) annual conference, Webb said that he believed that the cause of this increase had been incorrectly attributed, stating: "To read the papers, it is all early retirement people who have enjoyed the slower pace of life during the pandemic and decided to retire."

Instead of the increase being driven by early retirement Webb stated that it has instead been driven by worker sickness.

Evidencing this claim, Webb pointed to figures from Great Retirement or Great Sickness?, an upcoming paper from LCP that is scheduled to be released “in the next couple of weeks”, which found that, of the 630,000 economically inactive people mentioned by Hunt, the net increase of those in retirement was 8,000.

Webb explained that, in contrast, around 350,000 working aged Brits had become economically inactive because of long-term sickness.

Providing a more detailed breakdown of the figures, Webb explained that, of the 630,000 economically inactive people referenced by Hunt, 45 per cent of them were under the age of 50, including 200,000 students who had extended their higher educational life through post-graduate degrees.

Webb argued that the government’s approach to this increase in economically inactive adults was influenced, in some capacity, by looking at this issue through the lens of pensions, stating: "The chancellor made the mistake of asking the Minister for Work and Pensions to solve this problem which leads you towards a pension-based solution and, as it turns out, it is nothing to do with retirement from paid work, it’s to do with sickness."

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