Over-65s' employment levels fall following record increase

The number of people aged 65 and older in employment in the UK fell slightly in the period May-July 2022 to 1.42 million, following a record increase in April-June 2022, according to Office for National Statistics (ONS) figures.

An extra 173,000 over-65s joined the workforce between April and June, bringing the total to 1.47 million, or 11.9 per cent of over-65s.

However, the ONS figure for May-July showed that the number of workers had fallen to 1.42 million, equivalent 11.5 per cent.

Despite this recent fall, the number of over-65s in employment is still around 124,000 higher than at the start of 2022.

The surge in over-65s joining the workforce in April-June was primarily attributed to people taking on part-time work, with industries where informal employment is more common, such as hospitality, seeing some of the biggest increases.

“In the latest period between May and July, the number of over-65s in work slipped back by around 50,000 to just over 1.4 million, which remains close to record levels and roughly the same number in employment as before the pandemic hit,” commented AJ Bell head of retirement policy, Tom Selby.

“The reasons behind the 2022 rise in employment among older people remain unclear, although the spike in inflation we have seen recently – coupled with expectations of spiralling energy bills – will likely have been a major factor.

“Given the very strained economic circumstances millions of households are facing, some of those returning to the workforce will inevitably have felt forced into the decision.

"Others will have been happy to pick up some extra hours and might enjoy working, possibly on a part-time basis, while taking an income from their pension.

“Prime Minister Liz Truss’ decision to freeze energy bills should mean some of those who felt forced to return to work as inflation raised its ugly head might either reduce hours or stop work altogether.

"However, this will depend in part on the impact the freeze has on the cost of living in the wider economy.”

Interactive Investor head of pensions and savings, Becky O’Connor, added that the record rise in over-65s in employment in Q2 showed that reality was biting for people who might prefer to be retired but cannot 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 continued.

“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.

“This might feel like the end of retirement dreams, but hopefully, for those that do still want to stop work altogether one day, it’s a temporary halt to plans, while times are tough.”

Employment of people aged between 50 and 64 was also found to have fallen since the beginning of the pandemic, following nearly two decades of increases.

From the mid-1990s to the beginning of the pandemic in early 2020, the employment rate for people aged 50-64 had risen from 57.2 per cent to 72.5 per cent.

However, by 2022 this had fallen to 70.7 per cent.

“The pandemic has delivered a real blow to the employment prospects of older workers,” said Hargreaves Lansdown senior pensions and retirement analyst, Helen Morrissey.

“After years of growth the 50-plus age group saw the largest increase in inactivity of any other age group with many choosing to retire after being furloughed or made redundant. Hopefully, this decrease is a short-term blip as their exit from the workforce leaves a huge gap.

“Retirement was a key reason for choosing to exit the workforce for the over 60s but it’s also worth saying that for the over 50s stress was a key factor, as was the need for some kind of lifestyle change.

"However, it is clear there are still many who want to remain or return to the workforce with over 760,000 saying they are willing to work.”

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