Annex 5: Working for longer (see paragraphs
4 and 8-11 of the report)
103. As described in Annex 4, an increase in
the number of retired people would affect the 'dependency' ratio,
as well as having an impact on the economy and the fiscal choices
that are available to the Government. But if the average retirement
age rises as longevity increases, the 'dependency' ratio could
be stabilised or reduced. This would result in a likely increase
in GDP per capita (see Annex 4) and a boost in tax receipts.
104. More importantly, however, individuals choosing
to work for longer would themselves benefit from additional income,
the potential for more saving, a reduction in the length of time
the individual is dependent on those savings and often an improvement
in physical health, mental health, and in well-being.[88]
105. By employing older workers, employers would
benefit from the fruits of older workers' experience, knowledge
and wisdom and a substantial implicit wage subsidy from employing
people over state pension age, because they may undertake part-time
work for a relatively low wage due to enjoying supplementary pension
income.[89]
106. Wider social benefits related to people
staying in work for longer include reduced levels of isolation
and loneliness among older people, with accompanying healthcare
savings.[90]
107. By 2030, men aged 65 in the UK will expect
to live until they are over 88 (23.4 years past the age of 65),
and women to the age of 91 (26 years past the age of 65).[91]
If our society and economy are to maximise the benefits of
longer lives, older people must be enabled to stay in employment
for longer.[92]
Expectations of early retirement must change.[93]
Employers and the Government should remove disincentives for older
people to work for longeralthough the choice to continue
in work must remain entirely with the individual. Possible
incentives are discussed below.
108. The Committee considered that the following
measures would do much to change attitudes to people working later
in life:
· The incentives in the tax, benefit
and pensions systems for both early and fixed-date retirement
should be actively reviewed. It should be beneficial to defer
taking state and private pensions. ILC-UK conducted a survey
on the prospects for extended working lives that demonstrated
a strong willingness across all age groups to work for longer
in various circumstances. For example, 41% of men and 39% of women
said they would consider delaying their retirement if they could
defer their state pension entitlement in return for higher payments
laterwhich in fact they can already do.[94]
· 'Cliff-edge' retirement should end:
a culture change is needed so that both individuals and employers
end the expectation of retirement at an arbitrary age. Flexible
retirement and withdrawal from the workforce must be made a reality,
by enabling people to downshift to part-time work, and wind down
work while taking up pensions, benefits and tax relief more flexibly.
ILC-UK reported that 46% of men and women would consider delaying
retirement if their employer offered support for reducing their
hours, or for more flexible working.[95]
Dr Ros Altmann, Director-General, the Saga Group, described "a
phase of life after full-time work where you are cutting down
but not stopping altogether".[96]
· Employers need to be much more positive
about employing older people. Employers and employees should
adopt a more flexible conception of how and when people move on
from paid work as they get older, to their mutual advantage.[97]
Employers should demonstrate more flexibility towards the employment
of older workers, and help them to adapt, re-skill and gradually
move to more suitable roles and hours when they want to do so.[98]
The TUC argued that if employers paid more attention to flexible
working, health and safety, retraining, and procedures against
discrimination, employees would work for longer.[99]
Kayte Lawton, Senior Research Fellow, IPPR, told us that while
it is difficult to shift employers' attitudes, it is possible
to use "smart regulations" to open up opportunities
for part-time work and flexible working. She proposed a right
to return to a job "in a similar way as maternity leave works:
if you have a period of ill health and you need to take a number
of months off your employer then is required to take you back".[100]
· As part of breaking down the outdated
cultural expectation of cliff-edge retirement at an arbitrary
age, the Government should look at moving away from using age
as a defining measure for service or benefit eligibility. Age
is no longer a good indicator of need or ability to pay, so the
Government should review whether age alone is a sensible determinant
for tax liability, access to services or benefits.
· Employers should support those with
responsibilities for caring for older peopleparticularly
people in their 50s or 60s who care for elderly parentsto
continue part-time or in flexible work. Carers UK reported
that by 2037, nine million people are projected to be caring for
"an older or disabled loved one", and that in the last
10 years the proportion of carers caring for over 50 hours a week
has doubled.[101] Carers
UK have found that more than 40% of carers who gave up work did
so due to a lack of sufficiently reliable or flexible services.
The average cost of recruitment, retraining and lost productivity
is around £11,000 per staff member lost, according to the
organisation's analysis.[102]
Carers UK also reported that 41% of those who described themselves
as looking after their home and family (85% of whom are women)
said that "they would rather be in paid work, but services
available do not make a job possible". The peak age for caring,
45 to 65, also often represents employees' peak age for training,
skills and experience, which employers are at risk of losing at
short notice if the social care system cannot enable families
to juggle work and care.[103]
· The Committee received impressive evidence
from employers such as BT and B&Q who are making notable strides
towards creating a more favourable employment environment for
older people, but was disappointed not to receive more evidence
from employers' representatives about whether they also saw a
need for similar shifts in other employers' attitudes and working
practices.[104] The
primary motivating factor for those companies that had introduced
policies to enable people to stay longer in work was that this
approach was beneficial to their profitability.[105]
Employers should recognise that the employment of older workers
is in their interests, as well as having a beneficial effect on
economic growth.[106]
· Welfare to work policies should also
address the needs of older people. Steve Webb MP, Minister
of State for Pensions, proposed that the Work Programme could
do more to get older people back into work.[107]
The Department for Work and Pensions has for some time aimed to
improve its service to those approaching retirement age, but its
plans must be more ambitious and urgent.[108]
Low-skilled and manual workers will face particular hurdles to
continued employment and re-employment. Employers need to think
imaginatively about how they can help this group of people to
stay working in suitable jobs if they wish to. These workers should
receive help to retrain; manual workers should be supported to
shift to non-manual roles.[109]
The Government should not neglect their responsibility to support
the large numbers of people who, as a result of physically demanding
working lives or due to co-morbidities associated with older age,
will be too sick or disabled to continue in work.[110]
· The Government should communicate the
benefits of people staying longer in the workforce. In particular,
the Government should publicly reject the 'lump of labour fallacy'
that wrongly argues that more older people in work will disadvantage
the young. More older people in work will not mean fewer jobs
for young people. A larger workforce, with more people in work
and earning, creates its own demand; and we know that in practice
the fallacy does not holdprevious attempts, both in the
UK and abroad, to create jobs for young people by encouraging
early labour market withdrawal have failed miserably. A 2008 report
by the Institute for Fiscal Studies on early retirement and youth
unemployment concluded "we find no evidence of long-term
crowding-out of younger individuals from the labor market by older
workers. The evidence, according to a variety of methods, points
always in the direction of an absence of such a relationship".[111]
Permanent Secretary, Department for Communities and Local Government
and Head of the Civil Service, Sir Bob Kerslake, confirmed to
us that "It is absolutely clear that we will have to work
longer", but that while "the Government have faced up
to that issue", he was "not yet sure the country has
faced up to that issue".[112]
109. Extending working lives will be a vital
part of the response to living longer. In addition, the country
will still need to make important choices about public service
delivery in order to ensure that the growing older population
gets the public services that it will require. The following annexes
outline these choices.
88 Q 330 (Ben Jupp, Director, Social Finance); B&Q. Back
89
B&Q; Q 330. It should be noted, however, that salaries for
older workers may be higher to begin with. Back
90
B&Q; see Professor Peter Goldblatt at Q 542 for the connection
between social isolation and ill health. Back
91
ONS, Pension Trends, Chapter 2: Population change, February
2012. Back
92
Central Government (DoH, DWP and DCLG), written evidence. Back
93
The Saga Group. Back
94
ILC-UK; Age UK; Q 135. Back
95
ILC-UK; QQ 515-516 (Dianah Worman, Chartered Institute for Personnel
Development (CIPD)). Back
96
Q 465; TUC. Back
97
Central Government (DoH, DWP and DCLG), written evidence. Back
98
Bernard H. Casey and Robert Lindley, Older worker policy in
the United Kingdom: a case of schizophrenia, Institute for
Employment Research, University of Warwick, August 2012. Back
99
TUC. Back
100
Q 155 Back
101
Q 277 Back
102
Carers UK. Back
103
Carers UK; Q 517 (Dr Craig Berry, Pensions Policy Officer, TUC);
QQ 524-5 (Caroline Waters, Director of People and Policy, BT);
Central Government (DoH, DWP and DCLG), written evidence. Back
104
CBI. Back
105
B&Q; Q 530 (Professor John Philpott, Economist and labour
market research analyst, former director of Employment Policy
Institute and former Chief Economic Adviser at the CIPD), Q 688;
Q 531. Back
106
Central Government (Department for Work and Pensions) further,
further supplementary evidence. Back
107
Q 687; Central Government (DoH, DWP and DCLG), written evidence. Back
108
Home Instead Senior Care; Central Government (Department of Health
and Department for Work and Pensions), further supplementary written
evidence. Back
109
Q 517 (Dr Berry); Low Incomes Tax Reform Group (LITRG) and Tax
Help for Older People; Older People's Commissioner for Wales;
Vale Older People's Strategy Forum. Back
110
TUC. Back
111
Institute for Fiscal Studies, Releasing Jobs for the Young?
Early Retirement and Youth Unemployment in the United Kingdom,
July 2008,. Back
112
Q 639 Back
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