Husbands work for longer as wives wait to retire

0
Have your say

The rising state pension age for women is also prompting their husbands to work for longer, research has suggested.

The Institute for Fiscal Studies (IFS) looked at the impact that increasing women’s pension age has had over the last couple of years – and found that 8,300 more men were in work than there would otherwise have been.

The IFS suggested that husbands are re-working their plans so that they can retire at the same time as their wife, or that men are having to delay their own retirement in order to make up their partner’s lost pension income with additional earnings.

Researchers used data from the two years since the female state pension age began to increase from age 60 in April 2010 to examine the impact on the labour market.

As a result of the one-year increase in the female state pension age from 60 to 61 over the two-year period, employment rates among 60-year-old women increased from 41.5 per cent to more than half (51.4 per cent), despite the tough economy.

This meant that there were 27,000 more women in work than there would otherwise have been and overall there were 35,000 more men and women working as a direct result of the increase to the state pension age.

The UK’s public finances have been strengthened by about £2.1bn as a result of the changes and future increases in the state pension age are likely to lead to a “substantial increase in employment”, the report said.

Jonathan Cribb, a co-author of the report, said: “Increasing the age at which women can first receive their state pension has led to significant numbers of women deferring their retirement, with over half of women aged 60 now in paid work for the first time ever.

“We also find that some husbands are responding by remaining in work for longer.”

Mr Cribb added: “This is initial evidence that raising pension ages can have significant positive effects on employment.”

The findings come at a time when the Government is trying to encourage people to do more to save for their later years, with its landmark automatic enrolment programme which will eventually see up to 10 million people placed in workplace pensions.

Recent retirees have had their incomes squashed by plummeting annuity rates, which set the size of someone’s pension for life and have been affected by quantitative easing (QE).

Research from Prudential recently found that people retiring in 2013 expect to have an income of about £15,300 a year, which is the lowest amount recorded in six years and £3,400 lower than in 2008.

Joanne Segars, chief executive of the National Association of Pension Funds (NAPF), said: “The IFS research is intriguing.

“Many men and women might be delaying retirement because they want to keep working, or because they need the money. Some might be trying to postpone turning their pension pot into an annuity while rates are so poor.”

Ms Segars said that more than half of workers have told the pensions body that they expect to keep working beyond the state pension age because they will not be able to afford to retire and said it is “essential” that people plan their retirement saving.

Minister for Pensions Steve Webb said: “It is good news that more women - and men - are working beyond the traditional retirement age.

“An extra year or two of paid work can bring a big boost to someone’s state and private pension entitlement, and they will still go on to enjoy an average of more than two decades of retirement.”