Older workers, Later Lives
Income falls and the consequences for older workers
This report by leading UK data scientists at Smart Data Foundry examines the risk of financial vulnerability amongst those in their 50s and 60s, to understand what changes could be made to improve financial security in later life.
It reveals that:
- The over-50s, especially those aged 50-55, are being hit particularly hard financially and could face a lifetime of financial insecurity.
- Economic inactivity rates have risen by a third amongst the over 50s since 2019.
- People between 50-54 face double the financial vulnerability risk of those aged 70-74.
Older workers who experienced an income drop of over 30% are between 60% and 170% more at risk of financial vulnerability than peers who have experienced an income drop of 10% or less.
Researchers make five recommendations based on their findings:
- To reduce financial hardship for homeowners on Universal Credit, for the DWP to further reform the Support for Mortgage Relief (SMI) loan facility and remove the zero earnings rule.
- To prevent pensioner poverty, for the immediate reinstatement of Pension Credit for mixed age couples on Universal Credit. The DWP needs to rectify shortcomings in the delivery of the state pension and allow Universal Credit recipients reaching the state pension age to continue receiving Universal Credit until the receipt of their state pension is confirmed.
- To reduce the risk of pension assets being spent prior to retirement, for the DWP to review the current capital limits for means-tested benefits. The recommendation is that the current £16,000 savings limit should be significantly increased.
- To improve transition to retirement, increased government investment in the Pension Wise guidance service. The number of Pension Wise sessions available to individual savers needs to be increased, and Pension Wise's remit needs to be expanded to cover the state pension and defined benefit pensions.
- To improve employment prospects for older workers, for a government funded employment programme targeted at older manual workers and self-employed older workers who need support in changing their career. The Restart scheme, which helps the long-term unemployed back into work, should be available from the first day of unemployment for the over 55s.