The UK state pension age will reach 67 by 2028 and more future rises are being considered. The argument is that we are all living longer and therefore we should receive our state pension at a later age. Both of these statements are often accepted as self-evident, but are they?
Demographic age change
The demographic change in the median age of the UK population and the number of those over the age of 65 has changed dramatically since the 1950s. According to the Office for National Statistics (ONS), in 1950 there were 5.3 million people over the age of 65 accounting for 10.8% of the British population. In 2018, the 11 million people over the age of 65 accounted for 18% of the population.
By the middle of this century, those over the age of 65 are projected to be 17.4 million and 24.8% of the population. The oldest old are the fastest growing age group and they are projected to be 5% of the population by 2050. The median age of the population, the age at which half the population in younger and half older, has risen from 34 years in 1950 to 40 years in 2018 and is projected to be 43 years by 2050.
These statistics are the fundamental reason why there is a call for the state pension age to increase. However, the picture is far more complex than simply live longer so work longer.
Life expectancy slowdown
Over the last 100 years, life expectancy has improved dramatically. By 2019 life expectancy at birth in England reached 79.9 for men and 86.3 for women. The Covid-19 pandemic has caused life expectancy to fall by 1.3 years for men and 1 year for women but the fall in life expectancy due to Covid-19 was preceded by a decade of falling improvements in life expectancy.
In the 100 years to 2010/2011, life expectancy improved by three years every decade but between 2011 and 2018 the increase in life expectancy was only 0.5 years for men and 0.2 years for women. It was virtually flat between 2015 and 2018.
The Kings Fund – What is Happening to Life Expectancy in England?
“With the exception of the US, the UK’s pre-pandemic life expectancy was lower than in many comparator countries for males and was the lowest for females, and it experienced among the lowest gains in the pre-pandemic decade. The UK has also seen larger falls in life expectancy during the pandemic relative to several comparator countries. Meaningful long-term gains in life expectancy, reducing inequalities and improving the UK’s standing in international comparisons of life expectancy will be major challenges in the future.”
This slowdown in life expectancy was seen in many European countries. It is a complex picture with many causes. There are slowing improvements in mortality from heart disease and strokes; there is an older population with more vulnerability to flu and other winter risks; there is a rising death rate among the young from mainly drug-related accidental poisoning. However, the slowdown in health improvements has also coincided with financial stress on health and social care services and, according to OECD life expectancy data, the slowdown was the greatest in the UK compared to other similar European countries.
The UK is among the few countries where the pandemic caused life expectancy to fall to about the level of a decade ago. The combined impact of the UK’s relatively poor record on pre-pandemic life expectancy and on mortality during the pandemic has been to worsen the UK’s standing compared to other countries.
This reduction in life expectancy improvement has caused some to reconsider whether further rises in pension age are sustainable. Others argue that present life expectancy could sustain the rises already mooted. With many now living into their 80s and 90s, they can be expected to be drawing their state pension for 20 and even over 30 years.
According to the Office for National Statistics (ONS) a female born this year has an average life expectancy of 91 years with a one in four chance of living to be 99 and a one in ten chance of living to be 102, although we have seen that slowing improvements in life expectancy and major global health risks could change these estimates. The future funding of the state pension is a thorny issue and further complicated when healthy life expectancy is considered.
Healthy life expectancy
Healthy life expectancy is an estimate of the number of years lived in ‘very good’ or ’good’ general health, based on how individuals perceive their general health. Disability-free life expectancy is an estimate of the number of years lived without a self-reported long-lasting physical or mental health condition that limits daily activities.
Healthy life expectancy has also improved over time but not as much as life expectancy. This means that people are living longer but with poorer health. Between 2018 and 2020 a man’s average life expectancy was 79.4 years but his average healthy life expectancy was only 61.3 years. For the same period a woman’s average life expectancy was 83.1 of which 19.3 years would have been spent in poor health. This has major implications for the state pension age.
Healthy life expectancy is closely related to deprivation. People living in more affluent areas have a significantly longer life expectancy and the healthy living expectancy gap is even wider at almost two decades. However, more affluent people are more likely to have a good personal pension and be able to retire early. Those who cannot retire before state pension age are more likely to be in the poorest health.
Research from Canada Life revealed that 43% UK adults aged 55-66 years old have chosen to take an early retirement since the beginning of the pandemic in March 2020. A third retired completely while 11% semi-retired. Another 16% have reduced their working hours. Most were in a position to use savings, investments, pension pots or inheritance money to finance their decision.
The ONS Over 50’s lifestyle study identified the following reasons:
Among those who would consider returning to work, the most important factors when choosing a paid job were flexible working hours (32%), good pay (23%), and being able to work from home (12%). Among those currently in work, access to support may be a factor in retaining the workforce with those who have never left the workforce more likely to have access to employer support than those who left work.
Around one in five (18%) said they were currently on an NHS waiting list for medical treatment; this rose to 35% for those who left their previous job for a health-related condition. Adults aged 50 to 54 years were more likely to leave work due to stress (19%) or not feeling supported in their job (17%), compared with those aged 60 to 65 years (10% and 8%, respectively).
Is working longer good for your wellbeing?
Data from the English longitudinal study of ageing found that about a quarter of women and 15% of the men worked past pensionable age. The majority were in paid work because they enjoyed it and wanted to keep fit and active. Others reported financial issues. Those who voluntarily worked had the highest quality of life and improvements in wellbeing when they finally retired. The opposite was the case for those forced to continue to work through financial necessity.
The study showed that extending our working lives may only be beneficial for wellbeing if it is a positive choice. Those who are forced to continue working, usually for financial reasons, may be disadvantaged. As we have seen, the most deprived are likely to have the poorest health and also, as the most financially disadvantaged group, be forced to work longer further reducing their wellbeing. The conclusion is that ensuring financial wellbeing in later years could make longer working a positive choice.
The working environment
‘I’m exhausted from being exhausted…’ is the harrowing expression of weary, depleted staff across the NHS and in social care.
We have seen that those who voluntarily work over pension age did so because they enjoyed their work and often mentioned the need to stay fit and healthy. We have also seen that many leave work because they do not feel supported or because stress affects their mental health. A supportive working environment is crucial for the retention of staff. We have also seen that the health of the population is crucial if workers are expected to extend their working lives and that a significant proportion of the younger inactive are on an NHS waiting list which has recently hit 7 million. The over-50s lifestyle study has found that the over 50s and students are driving economic inactivity with long-term sickness now at a record high.
Economic activity at the older age range is inextricably linked with an excellent well-funded healthcare system and supportive workplaces that have a focus on good employee mental health. With UK job vacancies fluctuating around the 1.3 million mark and many older people having the skills that the employment market needs, we can see that improving health and working conditions is a prerequisite for changes to the pension age. As general energy levels decrease after the age of 60, flexible working patterns for those in jobs that require extreme physical activity also need to be considered. Those with control over their working lives and conditions have much better outcomes for wellbeing.
There is a shocking disparity of healthy lifespan between the disadvantaged and the more affluent. Ironically, the healthier affluent are often able to retire early compared to the disadvantaged, less healthy cohort. It is also the case that good health is often a prerequisite for those choosing to work past the current retirement age. This has huge implications for pension age. If we do not close the deprivation gap, it is difficult to see how the pension age can be increased.
Improvements in general working conditions for every age group are also crucial. Many workers are in financial situations that are not conducive to good health or to saving for retirement. Some in the gig economy have financial situations that are so tight they are not even able to take time off for medical appointments. Workers’ rights need to be strengthened rather than weakened if we are to retain a healthy workforce into older age and maintain the health and wellbeing of our economically active in every age group.
“All leaders can practise compassionate and inclusive leadership, positively and overtly valuing equity, equality, diversity and inclusion both for their own sake and for the impact on care quality. Staff wellbeing must also be part of every leader’s training, ongoing development and objectives.“Kings Fund, Leadership in the NHS