Older workers forced into retirement during pandemic, research suggests

Work by the Institute for Fiscal Studies (IFS) found nearly 50 to 70-year-olds who stopped working in 2020-21 have ended up in relative poverty, a significant rise on previous years.

This is also despite the overall poverty rates falling that year.

The think tank noted that older people who stop working often never return to employment, and so may be experiencing long-term poverty during the current cost of living crisis.

This has prompted calls for the government to press ahead with its “mid-life MOT” in order to give older workers the opportunity to get back into the workforce.

Xiaowei Xu, a senior research economist at IFS and an author of the research, said: “It is often assumed that older people who left the workforce during the pandemic were wealthy individuals retiring in comfort.

“Our analysis shows that those who left in the first year of the pandemic experienced a sharp rise in poverty, despite overall poverty rates falling that year, and also suffered large falls in well-being.

“Some of this group might well be amenable to coming back into the workforce with the right opportunities, and there are signs that some are returning already. If the government wants to get this group back to work, the success of policies to support older workers, such as the “mid-life MOT”, will be critical.”

The research, funded by the Joseph Rowntree Foundation (JRF), comes as part of the IFS upcoming report on living standards, poverty and inequality.

In 2020-21, those between 50 and 70 who stopped working in the last year reducing their food spending by around £60 a week on average, making bigger cutbacks than those in previous years who did not substantially change their spending habits.

These people also had lower levels of well-being than those who came before them, beyond the general deterioration of health the population saw during the pandemic.

In addition they were also less likely to receive their pension incomes than those who had stopped working in previous years.

Nearly half (49 per cent) did not have access to either private or state pensions, compared with 43 per cent of those who were newly inactive in 2019–20.

The researchers noted that many older workers who left the workforce were not retiring in comfort, suggesting that many may have been forced into early retirement even without access to their pensions needed to support them.

This will have led to a drop in living standards and wellbeing.

“These negative outcomes are only seen amongst older people who were newly inactive in the first year of the pandemic,” the research noted.

The IFS found that despite an unusually large number of people leaving the workforce the following year, these people had similar living standards to those pre-pandemic, suggesting they left voluntarily and on more comfortable incomes.