Why the rise in forced retirements is bad for the UK

Turns out 100,000 people were forced to retire against their will last year. That's a bad idea all round.

Last Updated: 31 Aug 2010

Charities Age Concern and Help the Aged report that more than 100,000 people were forced by their employer to retire last year when they hit the default retirement age of 65 – four times as many as in the previous year. You can see the appeal to a struggling employer: it allows them to take someone off the headcount without shelling out a big redundancy payment. But there are two big problems. One, the state can’t afford it, particularly at the moment. And two, forcing perfectly able people to retire against their will places an unnecessary limit on our future output...

The charities (which are in the process of joining forces) say the default retirement age has ‘stamped an expiry date on hundreds of thousands of older workers’. And it has no doubt that the recession has accentuated the problem. Director Michelle Mitchell said its latest research ‘clearly shows the use of forced retirement has spiralled out of control, offering some employers a low-cost shortcut to shed jobs during the recession.’ What’s more, it’s not expecting the situation to improve any time soon: around half of the 500,000+ over-60s approaching the retirement age reckon their employer will force them to collect their gold watch when they hit 65.

It’s true that employers are sometimes grateful of the excuse to get people off the payroll cheaply, and/ or free up a job for some younger blood. But it’s increasingly clear that a retirement age of 65 just won’t work. The big problem is that now people are living so much longer, the UK just can’t afford to support this growing army of pensioners financially. More than a quarter of Government spending already goes on benefits – and if we’re going to have any chance of reducing the deficit, we can’t afford this to keep rising.

In fact, PwC released a report today suggesting that the retirement age will actually need to go up to 70 by the middle of the century, to reflect the ageing population and our newly straitened public finances. This would save £9bn a year, it suggested, enough to fund most of an earnings-linked state pension.

The other point is that lots of these forced pensioners don’t actually want to retire. According to the Age Concern’s survey, 64% of women and 24% of men (spot the lazier sex?) want to stay active beyond the current default age. If they’re keen to work, and have lots of skills to offer, surely we’re missing a trick if the state is paying them to stay at home watching Bargain Hunt when they could be doing something economically productive?

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Why the rise in forced retirements is bad for the UK

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