Greater numbers of retirees resulting in increasing stress on state pension systems

It is estimated that 13 million people in the UK—20% of the population—now claim the state pension. Based on a combination of pension claimant figures from the Department for Work and Pensions and the latest population estimates from the Office for National Statistics this figure has risen by nearly one a half million in just a decade.

Whilst some call for the government to raise the state pension age faster than currently projected to pay for the resulting financial burden of an aging population, others argue that workers are already making pensions more affordable for government by continuing to work later in life.

Paul Green, the communications director of Saga—a British company focused on serving the needs of those aged 50 and over—notes that “One million people are now still in work beyond the state pension age, and are continuing to contribute to the economy by paying more tax and spending more money,” making pensions more affordable for the government.

In her article on late-life work and well-being for IZA World of Labor, Carol Graham writes that both unemployment and fiscally unsustainable public pension schemes are critical issues that will face both advanced and emerging market economies for the foreseeable future. She notes that creative solutions are necessary, recommending “policies that support more flexible labor market arrangements, including incentives for job-sharing and remaining in the labor force after retirement age.”

Laura Hospido has written about pension reform and couples’ joint retirement decisions for IZA World of Labor, noting that “couples in Europe and the US are increasingly coordinating their retirement decisions.” Beginning in 2020, the official retirement age in the UK will be 66 for both men and women, a change that is expected to affect women’s retirement decisions more than those of men. However, Hospido warns that it could change men’s retirement decisions more than expected as well. She advises that in order to “avoid biasing efforts to estimate the expected impact of any pensions reform, policymakers should consider this joint decision-making behavior.”

Read more on this story here. 

Related articles:

Late-life work and well-being, by Carol Graham

Pension reform and couples’ joint retirement decisions, by Laura Hospido

The effect of early retirement schemes on youth employment, by René Böheim

The incentive effects of minimum pensions, by Sergi Jiménez-Martín