Retirement trends in the UK


We aren’t saving enough for retirement. This was one of the findings presented in Resolution Foundation’s recent audit of low to middle income households, Squeezed Britain, which showed that a massive 69 per cent of low to middle income households do not have a pension. Across all income groups the proportion failing to save for a pension has fallen over the last decade. This means that working in later life is now more important than ever.

Today, new analysis tells us how we’re doing when it comes to the employment of older workers. It shows that retirement ages – distinct from state pension age (SPA) – are rising. For both men and women, the average age at labour market exit increased by around a year between 2004 and 2010. What remains unclear is whether this is out of choice or necessity. Certainly many people still leave the labour market early. Just over half of men aged 51 to 64 had already left the labour market, and over a quarter of women aged 51 to 59 had done so.

Looking more generally, the release contains some good news and some bad news about the state of employment among older people. First the good:

  •       The rate of employment among older people (50 to SPA) rose from the early 1990s until 2008. [1] Over the recession this rate has remained fairly stable.
  •        The economic support ratio (ESR) – the number of working people aged 16+ per non-working person of any age – has been on an upwards trajectory, excluding dips during recessions. This is good news, as it means more working people to support the non-working population, though it is unclear whether this progress will persist. Higher employment and later retirement, along with the increase in SPA, may continue to push this ratio up. However the retirement of the baby boomers is likely put downward pressure on the ESR. The relative strengths of each of these factors will determine if the ratio continues to rise, stagnates or falls in the future.

These three trends are generally very positive. But now for the bad news:

  •       The gap in employment rates between men and women still looms large among older people. Increases in SPA will address some of this gap. However, there are also issues around the nature of jobs done by older men and women. Older women tend to be in much lower skilled and lower paid work than their male counterparts. This has implications for job security and wage progression, as well as employment prospects if they fall out of work.
  •        Economic inactivity among men (aged 16 to 64) has risen since the 1970s. In today’s new report, the ONS defer to the consensus view that attributes this change to the decline in manufacturing. This industrial change hit older people disproportionately.

Taken in the round, it looks like further increases in SPA will contribute to an already strong trend for working longer. Yet some groups – particularly older men affected by industrial change, older women trapped in low skilled low paid work, and people who have been forced out the labour market due to high barriers to employment – risk being left behind.


[1] This trend will be partly a result of cohort effects, as each successive generation has greater overall labour market attachment than the last