Staying late at work and the state pension for women

Staying late at work and the state pension for women
April 3, 2017 Mark Richards

state pension

Over the last four years, the number of women working into their late 60s and on into their 70s has increased dramatically

“An analysis by the Department of Work and Pensions…” When a story starts like that, you know it is not going to be good news. It was not – with the DWP’s analysis suggesting that workers under the age of 30 may not receive their state pension until they reach 70. The gloom was deepened by a second official report, proposing that those under the age of 45 may have to wait a year longer than at present – until they reach 68 – to receive their pensions. The government is due to make a decision on both reports in May, but there seems little doubt that the state pension age will once again be pushed back.

“These reports make unwelcome reading,” said Tom McPhail, head of retirement at Hargreaves Lansdown.

“For those in their 30s and younger, it reinforces the expectation of a state pension from age 70, which means an extra two years of work.”  

You cannot argue with the numbers

As we have written previously, the demographics are inescapable. People are living longer – but they are not living longer in better health, with a recent story on the BBC suggest that 20m Britons are physically inactive. That in itself puts a strain on the NHS and the nation’s finances, but the problem is compounded by more people living alone (increasing the social care bill) and the explosion in Type 2 diabetes, which if it is not addressed, may ultimately lead to the end of the NHS as a ‘free at the point of delivery’ service.

Simply put, the state can no longer afford retirement at 65 or 66 or 67: pushing back the retirement age even further is the only realistic option given the current pressures.

Women particularly hard hit by this move

Theoretically, the bad news on the state pension age will not affect people for 30 or 40 years – but for many people, especially an increasing number of women, the need to work into their late 60s and on into their 70s is a pressing and immediate problem.

An analysis of official data has revealed that in 2012 5.6% of women only stopped working when they reached – or passed – age 70. By 2016, that figure had doubled to 11.3%. This means that women are fast catching up with men, with 15.6% of men estimated to be working into their 70s in 2016.

On the one hand, this can be viewed positively: changing laws on age discrimination and more flexible working practices are allowing people to work longer. Surely that has to be a good thing?

Unfortunately, the answer can often be ‘no.’ It is frequently sheer economic necessity that is compelling people to work longer – and again, this is especially true for women.

Women have – on average – much smaller sums invested in private pensions than men. Many of them do not qualify for a full state pension due to missing years in their national insurance contributions, mainly caused by career gaps to bring up a family.

Hargreaves Lansdown has analysed the official figures and their senior pension analyst, Nathan Long, commented:

“The jump in those leaving work over 70 may be due to individual choice. However, it is also a reflection of the increasing strain on the pension system. The best days of the well-funded retirement are behind us.” 

Long pointed out that there was a real risk to the country’s productivity.

“There is a danger that economic necessity will see workers trapped in jobs they do not want to do. This is bound to impact on productivity.”  

The official view 

The official view of women in work

The government has been desperate to put a positive spin on all this: in reality, they have little option. Work And Pensions Secretary Damian Green has painted a picture of flexible working, constant re-training and older workers passing on a lifetime of knowledge to younger colleagues. “I urge all businesses to re-assess the value of older workers,” he said.

“Nobody should write off hiring someone due to their age and it is unacceptable that some older people are overlooked for roles they would suit completely.” 

He went on point out that “staying in work for a few more years” can not only improve someone’s income, it ca also improve their physical and mental health. He may have a point there: remaining in work would certainly be an antidote to the epidemic of loneliness affecting older people in the UK.

Is it just the UK?

‘No’ is the simple answer to that question: it is a similar story in the USA – although there may be a gleam of light for Damian Green from the other side of the Atlantic…

A study in the New York Times, quoting research in the Journal of Economic Perspectives found that women’s career paths are now much more similar to those of men. Women are reaching more senior levels when they are younger and their working lives are stretching out longer. Compared to previous generations women are now more likely to be at work at every point in their lives, including in their 20s and 30s when they were traditionally having children. For women determined to build a career, childbirth is being pushed back, with a return to work after having children the norm.

Women working into their 70s

The most striking point about the survey was the confirmation of women becoming increasingly likely to work into their 60s and 70s. Very nearly 30% of women aged 65-69 are working in the US, up from 15% in the 1980s. 18% of women aged 70-74 work, up from 8%. And what is the most common reason for continuing to work? Not economic necessity, but because they enjoy it.

…Which brings us to Loraine Maurer, of Evansville, Indiana. Loraine works two shifts a week at her local McDonald’s, 44 years after first join the hamburger chain. What is significant is that Loraine joined McDonald’s when she was 50 – she is now 94 and has no plans to retire: a remarkable achievement given that she works the Friday and Saturday breakfast shifts, which means starting work at 5 am and getting up at 3 am.

“I told [my husband] I was too young to stay at home,” said Loraine as she recalled starting at the Golden Arches. Asked if she had ever considered becoming as manager Loraine said no: “Who wants to be a manager? I enjoy talking to the customers too much.”

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