Latest increase in people working longer the 'tip of the iceberg'

Hargreaves Lansdown has warned that latest government figures showing an increase in people working longer could be the “tip of the iceberg”.

With the state pension age rising and a large cohort of workers unable to fully benefit from DB savings or auto-enrolment, the provider has said that people are going to have to work longer, creating potential problems for employers.

Figures published by the government on 12 September show that 72.5 per cent of 50-64 year olds are in work, up from 71.2 per cent in 2017.

Men are now leaving work at an average age of 65.3, which is 2.1 years later than they were 20 years ago, while women have an average retirement age of 64.3, which is 3.5 years later than 20 years ago.

Hargreaves Lansdown senior analyst, Nathan Long, said it was not surprising that more people are working longer as society adapts to rising longevity.

However, he pointed out that although many of today’s retirees can rely on generous final salary pensions to see them through later life, a huge group of those in their late 40s and early 50s “are not so lucky”.

“These people were born too late for final salary pensions, but too early to fully benefit from auto-enrolment into their workplace pension and could find themselves squeezed,” said Long.

“Staying in work longer could be their only option as State Pension gets pushed further and further out, but it needs employers to rise to the challenge of providing the right kind of work, in a flexible format that suits older workers. This latest increase in people working longing looks like the tip of the iceberg.”

The government statistics also show that the current average age of retirement for men is lower than it was in 1950 (67.2 years old), but similar to what it was in 1970 (65.4 years old).

The current average age for women exiting the labour market, however, is now higher than the 1950 level of 63.9 years old.

The employment rates across both genders and all age groups have all increased since 1999. For the first time, the employment rate for females in the 60-64 year old age group is higher than the economically inactive rate.

The largest increase since 1999 among both males and females was in the 60-64 year old age group — up from 24.3 per cent to 51.4 per cent for females, and up from 47.6 per cent to 60.8 per cent for males.

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