Government urged to help older workers at serious risk of poverty and derailed retirement plans.
Age UK has warned of a perfect storm for unemployed older workers age 50 to 64, many of whom lost jobs during the pandemic and now face long-term unemployment.
The charity, which sponsored a report into longevity inequality by the Pensions Policy Institute (PPI), also published today, calls for the Government to offer urgent help to those out of work in the run-up to state pension age, who it fears may be permanent casualties of the pandemic.
The interactive investor Great British Retirement Survey found that one in eight people who are yet to retire think they will need to delay retirement because of the downturn in markets caused by the pandemic, rising to one in five in the 60-to-65 age range.
The survey also found that one in four people had experienced a major life event setback, either through illness, divorce, redundancy, bereavement or caring responsibilities, which had derailed their retirement plans. Women and people with children were most likely to be affected.
Becky O’Connor, Head of Pensions and Savings at interactive investor, said: “Unemployment caused by the pandemic is putting some older workers at serious risk of poverty and derailed retirement plans.
“As well as job loss, this age group may have faced added caring responsibilities that have made it harder for them to continue earning.
“Even before the pandemic, major life events such as illness, divorce or caring responsibilities could force people to reduce working hours earlier than anticipated, with a knock-on effect on their retirement income.
“Rises in the state pension age according to life expectancy are out of step with the reality of many people’s lives. Being alive for longer doesn’t correlate with being able to work for longer, because as we age, the chance of all of us experiencing setbacks that make it harder to work is greater.”
“If, as a society, we continue to believe that people should be able to have some sort of retirement rather than work until they drop, then the Government needs to consider bringing in support earlier than state pension age for those that need it, taking a holistic view of an individual’s ability to return to work in the run-up to the age they can access their State Pension.
“People often start to run into ill health issues in their early sixties. Meanwhile the State Pension age is gradually increasing and will be 67 by 2028. If someone is unable to continue working due to ill-health from the age of 63 and has to stop work early, their pension will have to stretch further.
“For all workers planning their retirement, it makes sense to assume you will stop work earlier than retirement age when planning your finances. This will help prevent any damage done should something like ill health or job loss affect you later on.
“For younger workers, planning to retire earlier, even if they don't end up doing so, will reduce some of the strain. This might involve, for example, planning to pay off your mortgage earlier, by your early sixties.
“It’s also worth checking the risk level of your workplace pensions is right for your life stage. Research we published last week showed that 15 per cent of people don’t know the risk level of their pension. Risk levels have a huge impact on retirement outcomes. Too much risk at the wrong life stage isn’t sensible – but nor is too little. Over a fifth of 18 to 34-year olds are in low risk pensions, the ii research showed.”
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