2 August 2017

• Controlling State Pension costs is right but 1 in 5 women affected pushed into poverty
• IFS research shows rising State Pension age saves billions but leaves many in hardship
• Working age benefits are not enough to support women unable to keep working
• Government failure to properly inform women could justify helping some bridge the gap

Government is right to look to control the costs of state pensions: Clearly, in an aging population, with rising longevity and pay-as-you-go pensions, younger generations need to be protected against excessive burdens of old-age support. Equalising men and women’s pension ages makes sense, especially as women tend to live longer than men.

Failure to adequately warn women about rise from age 60: Ideally, though, any policy changes would be communicated well in advance and those affected would be given sufficient time to prepare for delays in starting pension receipt. Unfortunately, as the WASPI campaign highlights, the failure to communicate clearly and effectively is causing real problems for many of the women affected by the sharp pension age increases which started in 2010.

IFS shows significant cost savings: Research released today show the scale of the impact of rising State Pension age on those older people affected and on the public finances. The rise in women’s State Pension age between 2010 and 2016 has saved over £5billion in public spending and has benefited the Government in three ways. Firstly, the money saved by not paying pensioner benefits. Secondly, higher tax and national insurance receipts as women have continued working while waiting for their State Pension. Thirdly, the additional work these older women are doing should have boosted the economy.

But delayed pensions also caused increased poverty: Many of the women waiting longer for their state pension have been pushed into poverty. The IFS suggests one in five women aged 60-62 were in income poverty when their state pension age was increased to 63. It is clear from this new research that as long as women can keep working, they can mitigate the impact of delayed State Pension receipt, but those who cannot work either through illness, caring duties, unemployment or workplace age discrimination are left struggling.

Men are also affected by this change: Up to 2010, older men who were unable to work and had little other income could claim pension credit but the starting age for receipt of means-tested Pension Credit is also tied to women’s state pension age. So, as women’s state pension age rose to 63, men also had to wait longer for extra help. The IFS suggests that many single men have also been forced into income poverty as a result of this delay.

As State Pension age keeps rising, no allowance is made for those who cannot work:  There is a stark cliff-edge between the benefits available to people below state pension age and those above it. This is designed to encourage more people to keep working, however it makes no allowances for the problems of the significant minority of older people who genuinely cannot work. By 2020, the age for men and women will rise to 66 so the numbers in poverty will grow.

The poverty is temporary, but there’s no help to bridge the gap: The IFS points out that this poverty is temporary and as soon as they reach the new higher State Pension starting age, people will be better off. However there is nothing in the system to help those who really need to bridge the gap. If they have no private pension or other savings (and many older women have been particularly disadvantaged throughout their lives by lower earnings and lack of pension rights) then they have no choice but to cut back their spending to minimal levels. The IFS suggests they are not facing ‘material deprivation’ but politically there is a large group of older people who feel they have been unfairly treated and were not given sufficient chance to prepare themselves. Those affected might have been able to cut their spending in earlier years if they had been aware of the coming increase in their pension age. By failing to properly inform them, the hardship caused has been exacerbated.

Government could consider measures to ease the hardship of transition: There are no easy answers here, and it is important to control state spending, but I do hope Government might consider devising interim measures to help women – and men – in the transition period between their previous State Pension age and the new later date. Perhaps with early but reduced access to State Pensions, or payments that recognise poor health and other impediments to working longer, targeted on those in hardship due to the delayed pension age. It cannot be beyond the wit of policymakers to recognise the problems caused by the sharp rise in pension ages over a relatively short period of time and, in light of the cost savings, perhaps some help could be offered.

20 April 2017

Help poorer pensioners, older women and families facing elderly care

1. Radical overhaul of social care to ensure fairer system for all – a crisis worse than pensions
2. State Pension triple lock could move to a double lock, increasing by prices or earnings
3. Double lock should apply to Pension Credit so poorest pensioners are protected properly
4. Improve pension outcomes for women – private pensions, State Pensions and WASPI
5. Reform pensions tax relief to give everyone a 33% Government bonus on their contributions
6. Encourage longer working life – mid/later-life training, career reviews, apprenticeships

Government plans for Brexit and the economy will dominate many people’s thinking, but a coming Election Manifesto needs to cover other important issues that will affect the lives of older voters significantly.  Here’s some initial thoughts – a six-point plan to improve older people’s lives, while giving a more affordable, sustainable and fairer system for the future.

Here are my suggestions:

1. Radical overhaul of social care to ensure fairer system for all

In terms of fairness, it is absolutely vital that the Government finally addresses the ongoing and worsening crisis in social care.  The current system penalises elderly people and their families and lowers care standards, while raising the costs to those paying privately.  It is undermining the NHS and places the biggest burdens on those who fall ill, rather than being shared fairly.  There is no help for the poorest people with moderate needs, which makes it more likely that they end up in hospital or care homes and lose their independence.

Meanwhile, older people who do have savings have to lose everything, including the value of their home, before they get any state help at all.  The draconian means-test coupled with council cutbacks, on top of rapidly rising numbers of elderly people in our aging population has caused huge strain on the social care and health services, undermining the quality of social care (such as only allowing 15 minute visits and low paid staff on zero hours contracts).  The system is riddled with unfairnesses and is simply not fit for the 21^st Century.  Private payers who are denied state help end up paying over the odds for care, to make up for local authority underpayment.  This penalises those families who are unlucky enough to need elderly care twice – firstly they get no help from the State and secondly they also have to pay extra to cover the costs of those who are covered by the State.

This amounts to a most inequitable stealth tax, hitting the most vulnerable in society.  To add further to the unfairness, elderly people who are judged to have a health need, rather than social care need, will have all their care costs met by taxpayers.  This arbitrary allocation of resources is unsustainable and is placing the NHS under intolerable strain, even before the huge bulge of baby boomers reaches advanced old age.  Proper integration of health and social care is long overdue.  It is obvious that the State cannot pay to look after all baby boomers who will need it in coming years.

There is no money set aside for this purpose and younger taxpayers will be unable to afford it.  Therefore, incentivising those older people who have pensions, ISAs or other savings to earmark a sum to pay for care, while the State then covers the extra on top of that, would kick-start funding which is currently non-existent.  Introducing a Dilnot-style cap on care costs, then allowing tax free withdrawals from pension funds if needed to pay for care, plus introducing a special Care ISA allowance (that can be passed on free of Inheritance Tax) or allocating some proportion of property value up to a limit of, say, £70,000 per person, would ensure baby-boomers have incentives to prepare for their coming care costs, while also signalling that everyone will need to think about providing for care in old age, as well as pensions.

2. State Pension Triple lock could move to a double lock, increasing by prices or earnings

The triple lock commits to increasing (only some parts of the) State Pension by the highest of price inflation, average earnings or 2.5%.  The 2.5% commitment contained in the triple lock adds billions to the cost (it is estimated that State Pension has cost £3billion more for the years 2010 – 2016 than if a double lock had been in place).

The longer the triple lock lasts, the greater the future cost will be, with official forecasts predicting it will add at least £15billion to the long-term cost of State Pension provision.  The arbitrary 2.5% figure is a political construct with no economic or social logic.  When it was introduced, the State Pension had fallen well behind average earnings, so it served a useful function in increasing basic State Pensions to a more reasonable level.  But pensions have increased significantly relative to other benefits.

The Pensions Commission recommended only increasing State Pensions in line with earnings, but perhaps the Government should offer pensioners the higher of prices or earnings inflation, as a double lock, to protect against rises in the cost of living and average living standards of those in work.  If other benefits are being frozen, or only protected by either prices or earnings, to add the extra 2.5% protection for pensioners will cause increasing resentment and also adds to pressure to increase the State Pension age faster, which disadvantages those with lower life expectancy and in poorer health.  In addition to this, the new State Pension system has rendered the triple lock concept socially inequitable.

3. Double lock should apply to Pension Credit so poorest pensioners are protected properly

The triple lock, in fact, contains inherent unfairness which will worsen in coming years as more younger pensioners receive the new State Pension.  The triple lock does not actually protect many of the poorest and oldest pensioners because does not cover all State Pension payments.

It only applies to two bits of State Pension – the old Basic State Pension (up to around £120 a week) and the full new State Pension (up to around £160 a week, but only available to the youngest pensioners).  Most importantly, it does not apply to the Pension Credit (which the poorest pensioners receive).  A much fairer system would see the double lock protection extended to Pension Credit to help the oldest and poorest pensioners.

4. Improve pension outcomes for women – private pensions, State Pensions and WASPI

Women lose out in pensions in many different ways and, although the Government has made some improvements, both State and private pensions policies still discriminate against women.  As regards private pensions, women are losing out in workplace pensions.  There are several reasons for this.

The gender pay gap means they earn less than men, so their pension contributions will be lower but recent studies also show that women work in jobs with lower employer contributions and on average their employers pay 1% of salary less into their pensions than for the typical male.  Women also take career breaks which reduce their lifetime earnings.  In addition to these factors, women are also losing out in auto-enrolment as they are more likely to be low earners.

Only people earning over £10,000 a year in any one job are auto-enrolled by their employer.  So these lower earners lose out on their employer’s contribution and on the behavioural benefits of being automatically enrolled, even though they are the people who would probably most need better pensions and the behavioural nudge of being automatically enrolled.  Many women work in multiple low paid jobs, in order to fit their work commitments around caring responsibilities.  Even if these women’s total income is above £10,000, if they earn less than this in each job, they lose out on auto-enrolment completely.

The Government estimates that over 70,000 women are affected.  These women are also more likely to be losing out in State Pensions too.  The cracks in the National Insurance system penalise far more women than men.  Those earning less than £5,876 a year in any one job get no credit for their State Pension, even if they have multiple low paid jobs that would bring their earnings over the National Insurance threshold.  The Government estimates 20,000 -30,000 women are affected and they get no credit for their State Pension.

In addition, women who have children but are in households with incomes that disqualify them from Child Benefit have to claim the benefit even if they know they’re not entitled to it, otherwise they lose out on their State Pension credit too.  All these wrinkles in the National Insurance State Pension system should be removed, so that women are no longer discriminated against in these ways.  Finally, there are many WASPI women who were not properly notified of changes to their State Pension Age.  The Government should recognise the hardship its failure to communicate properly has caused and should ensure those affected are able to receive some early payment, to compensate for the short-notice increase in pension age which they did not have time to prepare for.

5. Reform pensions tax relief to give everyone a 33% Government bonus on contributions

The Government decided not to reform the current system of pensions incentives, that revolves around tax relief.  The present arrangements are not understood by the majority of people, who don’t realise that 20% tax relief gives them a 25% Government bonus on their pension contributions, while higher rate taxpayers get 40% tax relief, which is a 66% bonus on their contributions.

Instead of confusing people with a Lifetime ISA that could also be used for house purchase, the Government should introduce a fairer system of pension incentives shared more fairly, with a 33% Government bonus being offered to everyone.  The annual contribution limit would need to be cut from the current £40,000, and the Lifetime Allowance should be reformed or abolished.  The freedom and choice reforms have made pensions the most attractive retirement saving option, but if the Government is serious about helping those in the middle or less-advantaged positions in society, then making the pension system fairer for all should be a priority.

6. Encourage longer working life – mid/later-life training, career reviews, apprenticeships

If the Government is serious about controlling immigration, given the aging workforce it will also need to ensure that more older people stay engaged in the labour market than ever before.  This will need a radical rethink of workplace practice, as well as greater encouragement of mid-life training, career reviews and apprenticeships.

Those who can and want to work flexibly as they get older should be supported positively, with employers required to ensure age is no barrier to ongoing training and re-skilling opportunities.  Businesses should take the value of older members of their workforce more seriously and unlock the potential of older workers.  This can boost the economy both now and in future, as people have higher lifetime incomes and opportunities to build up better pensions.

5 February 2017

• Wake-up call to business to use home-grown skills and experience of older workers
• Over 50s women need specific help as they’ve been badly disadvantaged
• Rethinking retirement can increase economic activity and national income short-term and long-term
• 3’R’s vital to rethinking retirement – ‘Retain’, ‘Retrain’ and ‘Recruit’ more over 50s

In March 2015 I produced a Report as Business Champion of Older workers explaining the benefits of encouraging and enabling more people to work longer if they wish to. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/411420/a-new-vision-for-older-workers.pdf

I am pleased that the DWP has finally responded.  Two years have gone by and the importance of encouraging and enabling older people to keep working if they wish to, has increased significantly.  Much more work needs to be done. The new Business Champion for Older Workers is aiming to ensure many more older people can stay in work – that is to be applauded.

Brexit makes longer working life even more vital: As we prepare for Brexit and face reduced immigration, retaining more of our own older talent is more important than ever. We must make more use of British workers and increase support for later life working. With dramatic increases in life expectancy in recent years, plus the huge bulge of baby boomers reaching their 60s now, the opportunity to rethink retirement is urgent.

Longer working lives can be a win-win:  Helping more over 60s work part-time and facilitating flexible work, will enhance productivity and growth.  It’s a win-win, better for the economy, better for business and better for the individuals themselves, giving more people higher lifetime income and bigger pensions.

Older workers have valuable skills: Employing more older workers in an aging population will ensure the skills and experience of older British citizens are used more effectively, while also better meeting the needs of an aging customer base in many industries.

Older women face particular disadvantages: The Government also needs to recognise the particular position of older women.  The current cohort of women in their 50s and 60s has been particularly disadvantaged throughout their lives in terms of both earnings and pensions. These women were not included properly in the state pension system so they have lower state pensions than men – and their state pension age has been increased significantly without adequate warning. Many were excluded from workplace pensions, so they have lower private pensions too. When they had children they often lost out in terms of earnings and pensions. In addition, large numbers of these women are caring for older relatives and need more flexible work opportunities to enable them to keep earning. More flexibility, more support for women and closer monitoring of unconscious bias as well as outright age discrimination is needed to help overcome such disadvantage.

Big tax burdens on young if older workers retire too soon: Failure to facilitate fuller working lives will place a much bigger tax burden on younger generations and consign more older people to poverty. The best determinant of better off older people is whether or not they are still working. The aim of getting one million more over 50s to stay in work is important and the sooner we achieve it, the better for all of us.

Employers recognising benefits of older workers – using 3’R’s: The Government is building on the three ‘Rs’ concept introduced in my 2015 Report. Employers are increasingly recognising the benefits of ‘Retaining, Retraining and Recruiting’ older people in their workforce. The Business Taskforce that I established has continued its work and is now trialling initiatives that can help extend working life for those who want it, as well as helping older workers combine working with caring responsibilities, as will increasingly be required.

This is nothing less than a social revolution – and it’s already underway. More older people are working now than ever before, yet there is still much further to go. Even though life expectancy has risen by more than ten years in the past couple of generations, average retirement ages have fallen. What a waste of resources.

Working longer can boost pensions too: If more people keep working, perhaps increasingly on a part-time basis, they will still be earning money and many will be able to save more in their pensions as well as drawing on their private savings later, so they will last longer.

More initiatives needed: This is great news but there is still much to do. Whether it is more older worker specialists in Job Centres, or greater support for self employment, or mature apprenticeships and mid-life career reviews, we must do more to ensure older workers are engaged in the world of work for as long as they want or need to. The Government needs to recognise the importance of this agenda. Changing social norms is never easy, but it is vital to the future success of our nation.

I am delighted the new Business Champion for Older Workers team will be increasingly engaged with employers to promote this important agenda and wish them every success.

28 July, 2016

• Important new Statistical Series released today to track trends in later life working
• Massive increase in labour force participation for over 50s since the 1980s
• Older women show largest employment rise while proportion age 70-74 in work has doubled
• Rise in female participation pre-dates increase in state pension age

There is a social revolution underway, which can benefit millions of people in the UK, which is seeing increasing numbers of over 50s stay in work, continuing to increase their lifetime income, improving the productive potential of the economy and in many cases ensuring a better quality of life.  As older men and women realise it is not beneficial to aspire to retire when still relatively young, the trends in employment among people over age 50 are striking.

The DWP has today released figures that will form a brand new data set for the future.  They will track the trends in later life working and help us monitor how the world of work is developing for the over 50s.  The new statistical series shows changes in employment trends for women and men since the 1980s.

Following my role as the Government’s Business Champion for Older Workers and Pensions Minister, I have instigated continued statistical analysis of employment trends and engagement with business to help more people and employers benefit from the skills and experience of the more mature workforce that is on offer with an aging population.  The statistics released today demonstrate the historical trends that have seen sharp increases in number of over 50s staying in work.

This is all part of a much wider exercise in encouraging people to keep working, if they can and if they want or need to, and encouraging employers to recognise the enormous value that older workers offer to their businesses.

People are not necessarily ‘old’, in a conventional sense, at age 50, 60 or 70 and are increasingly choosing to keep working.  This can be good news for them, good for their employer and the economy too.  It will boost their lifetime income and can also be better for their health and general wellbeing.

Of course, it is also true that some people cannot work longer, or feel forced to go on when they would rather stop, but this is the minority.  Surveys that were part of my Business Champion for Older Workers report ‘A new vision for older workers – Retain Retrain Recruit’ showed that most people in their fifties want to keep working past their state pension age.

In 21^st Century Britain, after all the successes in healthcare and working conditions, it makes sense to celebrate the increased employment of older people and to take advantage of the skills and talents of our aging population.

As most readers of this blog will know by now, I have been appointed Minister for Pensions in David Cameron’s new government.

Having spent so many years studying pensions, savings and retirement policy as an independent expert, I have the chance of working inside government to drive things forward.  It will certainly keep me busy and be a great new challenge.

Recent years have seen sweeping changes to our pensions system, changes which have started to move pensions in a positive direction for the first time in years.  I now have the responsibility of continuing and building on this momentum.

Believe me, I am aware of the hard work that lies ahead.  I want to make pensions work better, be more easily understood and more popular.  For me, pensions have always been about people, not just about money and I will always try to bear that in mind in my policy deliberations.

We must continue to ensure today’s workers can save for their retirement with confidence. Automatic Enrolment has encouraged more than five million people into a workplace pension – but we still have a further five million to go, as the system continues to roll-out.  Opt-out rates have been encouragingly low, but so are the minimum contributions and of course we will need contributions to increase over time.

This is hugely important – most of us can expect to live longer than ever before and must save for our futures if we are to enjoy our later years in relative comfort. I am aware of the challenges of making the second half of the Auto-Enrolment roll-out go as smoothly as the first, and am conscious that the particular needs of smaller and micro employers have to be considered.

It has been really encouraging that the youngest workers have been those least inclined to opt out after being enrolled. But we mustn’t become complacent – we need to do all we can to ensure protective measures are in place to cement people’s trust in their pension investments and encourage engagement.

We need to improve consumer protection and financial education to help people understand more about getting a fair deal and the value of saving. As successful as Auto-Enrolment has been up to now, we cannot just assume the job is done.

I believe passionately that the new pension freedom reforms have made an historic difference in allowing people to make the most of their hard-earned savings. They provide consumer choice for all, not just the wealthiest, rather than forcing most people into buying an annuity that may not be suitable for their needs.

I have been saying for years that we must trust people with their own money – and I believe most British savers will be responsible when it comes to making these long-term decisions.  With the help of Pension Wise guidance, improved financial education and ultimately advice, many more people can make sensible decisions for themselves. Encouraging more later life working, particularly part-time, also has the power to benefit many people if they want to increase their lifetime income.

Towards the end of the last Parliament, the Government announced that the new pension freedoms could be extended to those who already have annuities – I very much hope this will become reality.

Next April will see the roll-out of the new State pension. This long-overdue reform will see today’s complicated multi-tiered system of basic and additional State Pensions ultimately replaced with a clearer, fairer, single-tier payment.  People need to understand what is happening to the State Pension and we must try to explain it more clearly, despite the complexities of the existing system.

It will benefit many – but it is not yet fully understood.  Importantly, it will bring an immediate and significant reduction in the proportion of pensioners on means-testing.  I have long warned that we must reduce means-testing penalties, so that people, especially the poorer pensioners, are not penalised for past saving or for continuing to work longer if they wish to.  We need to incentivise private provision, rather than penalise it.

And this is all just the start. My in tray is ever growing and I can expect a busy and exciting time ahead.  Please give me some time to settle in, consider the landscape and work my way forward with the tasks that need to be done.  I will do my very best to help in as many areas as I can, but I cannot make any announcements at this stage and it is not reasonable to expect instant action.  It will take a while to assess what is best.

Due to the demands of my new role, unfortunately I won’t be able to maintain this blog for a while. But don’t expect to stop hearing from me!

From inside Government I intend to remain dedicated to championing the rights of consumers and standing up for fairness, while working closely with the industry as we all adapt to the changing pensions landscape.  Ultimately, it will benefit everyone involved in pensions if we can find ways to improve customer experience and satisfaction.

It’s an exciting time for the world of pensions and it is essential we continue the progress for today’s pensioners as well as for future generations. I will try hard to make pensions work better for people and hope to be able to make a real difference. I would like to thank all of you who have offered me your support, kind comments and warm words – I will do my best to achieve success.

11 March 2015

• Overcoming barriers to later life working can boost prospects for old and young
• Government needs a strategy for adult skills, career reviews and must improve JobCentres
• Older workers are good for the economy, good for business and good for younger workers too

My Business Champion for Older Workers Report, published today, explains the case for ensuring the over 50s can stay in employment if they want or need to. The Report ‘A New Vision for Older Workers – Retain, Retrain, Recruit’ identifies significant failings in labour market practice and a lack of joined-up Government policy for the ageing workforce which will mean lower economic growth and greater burdens on younger generations in future years. The Report puts forward wide-ranging recommendations to Government, Business, media and individuals themselves which would address these failings to the benefit of us all.

Encouraging and enabling those who want to work longer is an idea whose time has come. As the Report explains, it has the power to increase our country’s economic activity significantly in the coming years. You can link to my Report here.

Older workers could boost the economy: Research by the NIESR shows that if all over 50s worked an extra 3 years this would add a massive £55bn a year to our economy (up to 3.25% to real GDP per year) by 2033 which is equivalent to an extra £55 billion in 2014 GDP terms. Even if everyone worked one year longer it could add 1% to growth.

Higher lifetime income and higher pensions: Enabling those who want to keep working in later life to do so, can mean higher lifetime income for millions of people, more output and spending power in the economy which will mean higher economic growth and better living standards for all of us. If individuals work three years longer on average earnings of £25,000 a year, they would earn an extra £75,000 in their lifetime and could have a pension 13% larger to spend for the rest of their life.

I hope this report marks the beginning of a great national debate. My findings and recommendations have the power to improve the working lives and the lifetime incomes of Britain’s over 50s. They could also transform the long-term future of British business and the economy.   The over 50s are a major untapped resource – a hidden talent pool that can boost output, employment and living standards now and in the future. Academic and historical evidence shows that, far from damaging job prospects, keeping more older people in work is associated with rising employment and wages for younger people.

Immigration can’t replace the numbers of over 50s who might leave work:. By 2022, there will be 700,000 fewer people aged 16 to 49 in the UK – but 3.7m more people aged between 50 and state pension age. If the over 50s continue to leave the workforce in line with previous norms we would suffer serious labour and skills shortages, which simply could not be filled by immigration alone.

This does not mean fewer jobs for the young – more older workers means more employment for younger people too: Research shows that having more over 50s in work is associated with both lower unemployment and higher wages for the young.  It is not true that each older worker in a job, denies employment to a younger person. There is not a fixed number of jobs and the more spending power in the economy, the more jobs can be created. In an individual company there may be a fixed number of positions, but only over the short-term. If demand for the company’s goods or services declines, it will reduce the number of jobs, but if demand rises, more jobs are created. This also applies to the economy as a whole. So keeping more older people in work, means they have more money to spend. Conversely, if more older people stop work, they will have lower spending power and ultimately there will be fewer jobs for younger people.  Historical evidence supports this conclusion too. For example, the 1970s ‘Job Release Scheme’ tried to encourage older people to leave work and ‘release’ jobs for the young, but the policy failed. Rising early retirement was accompanied by higher unemployment for younger people. Economists subsequently concluded that encouraging more older people to retire does not increase employment prospects for young people over time. It can actually have the opposite effect.

And Surveys show people want to work longer: The results of a nationwide YouGov poll commissioned for the report showed that around half of non retired over 50s wanted to still be working between ages 65 and 70 and only 15% of non-retired over 50s said they would want to stop work altogether between ages 60 and 65. If the results are applied to the whole UK population, this suggests 4.8million people want to keep working and not be retired between ages 65 and 70. Currently, there are around 1.2 million over 65s still in work. Therefore, there is potential for a significant rise in later life work. More than one in five of those already retired say they wish they had worked longer (equivalent to 2.3million people nationwide) – with 38% saying they miss the social interaction of work, indeed far more than the 27% who say they miss the income.

Traditional retirement outdated: Traditional ideas of a fixed, one-off, retirement date are changing, as the survey shows that nearly two-thirds of over 50s do not believe working full-time and then stopping altogether is the best way to retire. They prefer a period of part time work first.

Report finds significant evidence of unconscious bias and age discrimination: Older people face major hurdles in recruitment, which can be made worse by lack of confidence, inadequate up to date qualifications, long-term health conditions or the difficulty of combining work with caring. Many over 50s are affected by some or all of these factors, with older women facing particular problems.

Older women can face particular problems in the labour market: The cohort of women who are now reaching their 50s and 60s have been especially disadvantaged in terms of lifetime income and pensions, and face particular workplace barriers. They are more likely than their male colleagues to be carers which can have an impact on how they manage work, and although both men and women can face various health challenges as they get older, women have a particular health issue which is largely ignored in workplace thinking – the menopause. The potential impact of this important life event should be taken more seriously, talking about it more openly in the workplace and introducing support for those affected.

Although the Government has made a start by abolishing the default retirement age, more, much more, is needed. There remains significant ageism in the workplace, with older workers facing barriers to promotion, to training opportunities, to re-skilling and to returning to work after time out due to redundancy or caring.

To address these barriers, the Report suggests that employers and Government need to focus on the 3 ‘R’s:

• Retain – keep older workers and their skills in the workplace through, for example, flexible working;
• Retrain – provide ongoing workplace training irrespective of age and opportunities for mid-life career reviews; and
• Recruit – stamp out age discrimination from the recruitment process.

I hope that the next Government, whatever its makeup, will embrace the recommendations contained in my report. This must not be a political issue, it is of national importance regardless of politics. JobCentres are too often failing older applicants. Older workers need new skills, more opportunities for flexible working and retraining and career review help.

SUMMARY OF KEY RECOMMENDATIONS TO GOVERNMENT:

1. Adopt a joined up Government approach to tackling ageism. Consider appointing a national champion for older workers and funding detailed research of the economic, business, health and wellbeing benefits of longer working lives.
2. Introduce a national strategy – across Government departments – to improve adult skills, with funding for mid-life career reviews and apprenticeship schemes for all ages.
3. Tackle age discrimination by imposing penalties for breaking the law; encouraging whistleblowing against ageism in the workplace; introducing codes of good practice for recruitment or possibly even launching a formal investigation of the recruitment industry if discrimination persists.
4. Improve JobCentre programmes for over 50s jobseekers, with more early intervention, one-to-one support, better IT training, CV and social media skills help, and track the outcomes data to see what works.
5. Consider introducing temporary two year National Insurance relief for employers of older workers and ensure the current relief for employees over state pension age is more widely known.
6. Consider introducing Social Impact Bonds to fund back-to-work programmes and training for long-term unemployed older workers or returning carers, which can deliver savings to Government by lowering benefit spending, boosting tax revenues and reducing health spending.

KEY RECOMMENDATIONS TO BUSINESSES/EMPLOYERS

1. Plan effectively for an ageing workforce – with line manager training, age and skills audits and offering flexible working, gap breaks and family crisis leave – to help older workers combine caring with their working life wherever possible.
2. Offer training, and retraining, opportunities regardless of age, including for those who need to move from physically demanding roles to lighter work.
3. Ensure there is no unconscious bias or age discrimination in recruitment – monitor age of new hires, consider using a strapline in job adverts to confirm vacancies are open to all ages (such as ‘all ages welcome to apply’) .
4. Eradicate the gender and age discrimination which impact women in the labour force, with many saying ‘talent progression’ stops at age 45 for women (and age 55 for men). Don’t overlook the needs of older women, especially with support through the menopause.

RECOMMENDATIONS FOR OLDER WORKERS AND MEDIA

1. Don’t write yourself off when you reach your 50s or 60s, rethink retirement and perhaps consider flexible working or downshifting rather than stopping altogether.
2. Let’s have new images for old people – old age needs a media rebrand -and more older women on visual media: Wizened hands and walking sticks are inappropriate images for stories of older people and contribute to negative perceptions of over 50s. I urge the visual media to use more older presenters, especially females and to stop using the road signs showing stooped over people when writing about the over 50s. I would like the Government to abandon these signs as they feed into the negative subliminal perceptions of old age.

Many businesses have already recognised the opportunities: I have been encouraged by the groundswell of support for reform across a growing number of industries – not least in the Business Taskforce which I established. Two members of the Taskforce – Barclays and National Express – have introduced new apprenticeship schemes aimed at older workers. There are many reasons why businesses can benefit from keeping on or taking on older workers, as well as young recruits.

22 February 2015

• Having more over 50s in work is not a threat to younger people’s wages or employment – it is essential for economic progress
• Studies suggest more older people in employment improves employment and wages for the young
• In our ageing population, we should welcome higher employment levels for over 50s – if they shift to part-time that may depress average wages but is not a concern long-term
• Concerns about rising labour force participation by older workers being a threat to younger people are misguided – it is essential for economic progress
• Failure to encourage longer working lives will imply a larger tax burden on future generations, especially with the aging demographics and rising life expectancy
• More older workers leads to higher national income, higher national output and more jobs for younger generations
• We should welcome the rise in part-time workers in later life, which allows an extension of working life that can boost future individual and national income

Keeping more over 50s in employment does not mean fewer jobs for the young: There is extensive evidence showing that having more over 50s in work, is actually associated with both lower unemployment and higher wages for the young. A summary is in a Eurofound study by Rene Boheim [ http://wol.iza.org/articles/effect-of-early-retirement-schemes-on-youth-employment.pdf ] ‘The effect of early retirement schemes on youth employment’ which concludes that increasing retirement age leads to an increase in the wages and employment of younger workers. So it is in the interests of all of us to enable more older people to stay in work.

More over 50s staying in work is a major boost to our economic prospects:  Concerns that later retirement has caused slow wage growth in the post-2008 recovery, despite sharply falling unemployment and the massive job creation of recent years, are misguided. Such simplistic analysis fails to factor in the impact of an aging population and the trend to flexible or part-time work as an alternative to traditional retirement. In fact, these trends are hugely beneficial to our economy and should be celebrated.

The demographics suggest we need to ensure older people are employed for longer: The statistics are startling. Over the next few years, there will be 3.7million more people aged between 50 and state pension age, but 0.7million fewer people aged 16 to 49. Put another way, estimates suggest there will be 13.5million more job vacancies in the UK, but only 7million school-leavers. This net shortfall of workers cannot be filled by immigration of 200,000 a year. With our aging population, business urgently needs to recognise the demographic inevitability – either more over-50s will work longer, or we face declining economic growth.

The contention that early retirement leads to more employment opportunities for young people depends on two assumptions, both of which are flawed: For example, this argument assumes older and younger workers are easily substituted for each other. In fact, the skills of older people such as life and job-specific experience, are generally different from those of younger people who have not yet experienced working life. Therefore, younger and older workers are not normally good substitutes for each other – indeed their roles are often complementary.

There is not a fixed number of jobs in the economy:  It is not true that each older worker in a job denies employment to a younger person. This is not how economies work. There is not a fixed number of jobs. The more spending power in the economy, the more jobs can be created. If companies and individuals earn more, economic activity and employment can increase. In an individual company there may be a fixed number of positions, but only over the short-term. If business is good, the company can create more jobs – but if demand for the company’s goods or services declines, it will reduce the number of jobs. This also applies to the economy as a whole. So keeping more older people in work, means increasing national output, higher lifetime incomes and more money to spend in our aging population. Conversely, if more older people stop work, they will have lower spending power and ultimately there will be fewer jobs for younger people.

Having older people active and productive benefits people of all ages and ensures that more jobs are created:  Younger people’s wages rise as employment rates of older people increase [see Kalwij, Kepteyn and deVos, ‘Retirement of Older workers and employment of the young’] and as the number of workers age 55 and over increases, overall employment and wage levels rise and unemployment falls [see, Munnel and Wu ‘Will delayed retirement by baby boomers lead to higher unemployment among younger workers’].

Historical analysis both in the UK and elsewhere supports this conclusion: For example, after World War II, the dramatic increase in labour force participation by women did not mean fewer jobs for men. Instead, it boosted economic growth as there were more two-earner families with higher disposable income, which created more new jobs as spending power in the economy increased.

UK 1970s’ ‘Job Release Scheme’ failed:  In the 1970s, the UK Government tried to use ‘early retirement’ as a means of addressing youth employment. Its ‘Job Release Scheme’ aimed to encourage older people to leave work and ‘release’ jobs for the young, but the policy failed. Rising early retirement was accompanied by higher unemployment for younger people. Economists subsequently concluded that encouraging more older people to retire is not a way to increase employment prospects for young people over time.  It can actually have the opposite effect.

France has historically tried reducing retirement ages as a policy tool to reduce youth unemployment: From 1971 to 1993 the Government encouraged early retirement, but this led to a fall in employment of both older and younger workers. In contrast, from 1993 to 2005 more older people stayed in work and youth employment rates increased.

There are other examples too: In Germany in the early 1970s, employment of older workers fell by 7 percentage points, but employment for younger workers decreased by 2 percentage points. However, in 1992 the German Government introduced new incentives for older workers to stay in work, leading to a fall in youth unemployment.