Introduction
The United Kingdom (UK) has an ageing population; by the mid-2030s, 50% of adults will be aged 50+ (DWP 2017a). Life expectancy has steadily increased in recent decades, leading to growing numbers of adults above State Pension age (SPA) and decreasing numbers of working age adults. Economic concerns about the cost of funding State Pensions, alongside concerns about skills shortages, have prompted legislative changes designed to extend working life (Vickerstaff and Loretto 2017; WEC 2018). This chapter presents an overview of these changes and considers their potential impacts in terms of gender and health.
Extended Working Life: The Policy Context and Debate
UK governments have implemented a range of measures designed to delay individuals’ withdrawal from paid employment. In 2006, age-related discrimination was outlawed. In 2011, the default retirement age was abolished, meaning that workers cannot be forced to retire on the basis of age. Policy discourse regarding later life employment has shifted over time, from ‘reversing early retirement’ to ‘extending working life’, and now ‘fuller working lives’ (DWP 2017b). The Government seeks to encourage ‘employer-led change’ through the appointment of the Business in the Community (BiTC) Age at Work leadership team as Business Champion for Older Workers; their remit is to support employers to ‘retain, retrain and recruit’ workers aged 50+. Policy discourse also clearly places responsibility upon individuals to ensure that they continue in paid work for long enough to be able to support themselves financially through retirement (DWP 2017b).
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Since the mid-1990s, successive governments have sought to extend working life through raising SPA. The Pensions Act of 1995 equalised men and women’s SPA by incrementally raising women’s SPA from 60 to 65 between 2010 and 2020 (Vickerstaff and Loretto 2017). The Pensions Act 2011 brought forward this equalisation timetable to November 2018, whilst also raising SPA to 66 in phases between December 2018 and October 2020. The Pensions Act 2014 raised SPA again to 67 by 2028 and introduced a framework of regular reviews to consider the implications of increases in average life expectancy (DWP 2017b). In 2017, the Cridland review recommended increasing SPA to 68 between 2037 and 2039 (Cridland 2017); the Government has indicated that it intends to follow this recommendation (DWP 2017b).
Consistent with the prevailing neo-liberal economic and political context, these legislative changes to employment regulations and pension schemes have been framed both as an economic necessity, and as offering greater choice and control over work in later life (Foster and Ginn 2018). However, some of the assumptions underpinning employment and pension reforms have been challenged by a range of stakeholders, including older workers themselves. For example, the Women Against State Pension Inequality campaign claims that 3.8 million women have been adversely affected by the rapid rise in SPA, as they were not notified of changes following the 1995 and 2011 Pensions Acts (WASPI 2018). This has led to a significant increase in the number of women in their early sixties who left the labour market due to poor health or caring responsibilities, and who now have no independent income (Ginn and MacIntyre 2013). Health is also a key issue: almost half of workers aged 50+ experience at least one long-term health condition (Mouland 2018) and concerns have been raised about workers’ physical capacity to remain in the labour market until their late sixties (Vickerstaff and Loretto 2017). The Government’s approach to older workers and employment has recently been scrutinised in a Parliamentary Inquiry by the House of Commons Women and Equalities Committee (WEC 2018). Their report made wide-ranging recommendations to improve the position of older workers, such as enforcement of age-discrimination legislation, statutory paid leave for carers, and the default provision of flexible work options by all employers.
Age, Gender and Employment in the UK: Trends Over Time
Table 38.1 shows that employment rates for both men and women aged 50+ have steadily increased over the past two decades. Average age of exit from the labour market has also risen during this period. In 2017, men’s average age of exit from the labour market was 65.1 years, compared with 63.2 years in 1997. Women’s average age of exit from the labour market was 63.6 years in 2017, compared with 60.8 years in 1997 (DWP 2017c: 1). Nevertheless, the average age of leaving the labour market for both men and women is still lower than it was in 1950 (DWP 2017a). Above the age of 65, there is a significant fall in the employment rate for both men and women.
Table 38.1
Proportion in full- and part-time employment, by gender and age bands, 1997–2017, UK
Full-time | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Percentage | Percentage | Percentage | |||||||||
Men
| 1997 | 2007 | 2017 | Women | 1997 | 2007 | 2017 | All | 1997 | 2007 | 2017 |
35–49 | 83.8 | 84.9 | 84.6 | 35–49 | 38.8 | 42.6 | 45.1 | 35–49 | 61.1 | 63.5 | 64.6 |
50–54 | 75.9 | 80.1 | 80.4 | 50–54 | 38.8 | 42.6 | 49.7 | 50–54 | 55.7 | 62.5 | 64.8 |
55–59 | 62.2 | 65.8 | 68.3 | 55–59 | 23.3 | 34.2 | 39.8 | 55–59 | 42.5 | 49.8 | 53.8 |
60–64 | 38.9 | 44.1 | 44.6 | 60–64 | 7.9 | 11.1 | 19.6 | 60–64 | 23.1 | 27.2 | 31.8 |
65+ | 2.6 | 3.3 | 5.5 | 65+ | 0.5 | 0.7 | 1.4 | 65+ | 1.4 | 1.9 | 3.3 |
Part-time | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Percentage | Percentage | Percentage | |||||||||
Men
| 1997 | 2007 | 2017 | Women | 1997 | 2007 | 2017 | All | 1997 | 2007 | 2017 |
35–49 | 2.8 | 3.8 | 5.7 | 35–49 | 34.8 | 33.3 | 33.4 | 35–49 | 19.0 | 18.7 | 19.7 |
50–54 | 4.6 | 4.9 | 6.1 | 50–54 | 33.3 | 30.1 | 29.7 | 50–54 | 19.0 | 17.6 | 18.1 |
55–59 | 6.8 | 8.2 | 10.1 | 55–59 | 27.5 | 29.8 | 30.6 | 55–59 | 17.2 | 19.2 | 20.5 |
60–64 | 9.0 | 13.1 | 14.4 | 60–64 | 18.4 | 21.5 | 25.5 | 60–64 | 13.8 | 17.4 | 20.1 |
65+ | 4.8 | 6.4 | 7.7 | 65+ | 2.7 | 3.6 | 5.8 | 65+ | 3.6 | 4.8 | 6.7 |
The UK labour market is gender-segregated both horizontally and vertically, with women over-represented in low paid sectors and jobs. As Table 38.1 shows, patterns of full-time and part-time employment across the lifecourse are strongly associated with gender. The dominant pattern amongst men is full-time work until 65, followed by retirement (Loretto and Vickerstaff 2015). Women’s working lives are typically shorter, more fragmented, and characterised by much higher rates of part-time work compared to men (Vickerstaff and Loretto 2017). This reflects normative expectations about gendered social roles; traditionally, women have been expected to prioritise unpaid domestic caring roles, and engage in part-time paid employment to supplement the wages of male full-time breadwinners (Ginn and MacIntyre 2013). The gender pay gap widens with age. In 2017, the overall gap for employees of all ages was 18.4%. However, it was the largest for employees aged 50–59, at 26.6%—more than twice as high as the gap at ages 30–39 (12.7%) (ONS 2017).
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A substantial body of academic research in the UK has explored the gendered dimensions of issues such as ageing and employment, unpaid caring roles in later life, decision-making around retirement, and access to state and private pensions. Research on women’s work histories has demonstrated that the gendered nature of employment over the lifecourse has significant financial implications for later life (e.g. Blackburn et al. 2016). Women’s concentration in lower-paid, part-time employment means they are more constrained in their ability to build up independent pension savings prior to retirement compared to men (Foster and Ginn 2018; Ginn and MacIntyre 2013). Recent studies highlight how the domestic context influences men and women’s decisions about retirement timing (Loretto and Vickerstaff 2013), and how the complexities of women’s working lives shape their pathways into retirement (Duberley and Carmichael 2016; Loretto and Vickerstaff 2015). Studies have also revealed a range of barriers to extended working life, from ageist attitudes amongst employers, to caring responsibilities and poor health (Lain 2016; Loretto et al. 2017; Mouland 2018).
UK Pension System Reforms
The UK pension system has recently undergone major reforms. Up until 2016, there was a complex three-tier system: (1) the basic State Pension; (2) the earnings-related Additional State Pension; (3) private pensions (Grady 2015). In 2016, the two State Pension elements were replaced with a flat-rate, single-tier State Pension designed to be simpler and fairer than the previous basic State Pension. The Government claimed that the new State Pension would provide a guaranteed income for all because it is set at a higher weekly rate than the previous basic State Pension. However, to qualify for the full State Pension, individuals must have paid 35 full years of National Insurance (NI) contributions, compared to 30 years under the old system. Individuals who have paid between 10 and 34 years of NI contributions are awarded lower rates of State Pension along a sliding scale. People with fewer than 10 years’ worth of NI contributions are not eligible for a State Pension. It is possible to claim NI credits for periods of time out of the labour market due to circumstances such as caring responsibilities and disability (Gov.UK 2018). The Department of Work and Pensions (DWP) estimates that low-paid women who have a full contribution record will be better-off under the new State Pension system (DWP 2015). Despite this, critics argue that State Pension entitlement in the UK is based upon the assumption of a male worker model of continuous adult employment (Grady 2015). This model obscures the fact that women’s work histories and position in the labour market are different to those of men, largely due to their unpaid caring responsibilities (Foster and Heneghan 2017). The feasibility of women being able to reach the full 35 years of credits is questionable (Grady 2015; Vickerstaff and Loretto 2017).
By international standards, the UK State Pension provides a very low level of income. For 2018/19, the maximum weekly State Pension was £164.35 (£8,546.20 per annum). In 2017, the UK was ranked bottom of all OECD countries in terms of the net replacement rate of the State Pension for individuals entitled to the full State Pension: 29% for full-career average earners, compared to an OECD average of 63% (OECD 2017). The value of the State Pension increases every year, based either on the increase in average earnings in Great Britain, or on the inflation rate, or a rate of 2.5%, whichever is higher (Gov.UK 2018). This increase does not apply to expats who moved to countries that are not a part of EEA, or do not have social security agreements with the UK (Thurley and Keen 2018).
Women in the UK already receive approximately 25% less in State Pension than men, which reflects their lower lifetime earnings and more fragmented employment histories (Silcock et al. 2016). Pension Credit is a means-tested state benefit for people above SPA who are on a very low income; it brings up their weekly income to a minimum level. Women are more likely to be eligible for Pension Credit than men, due to their lower State Pension income (Silcock et al. 2016). From May 2019, Pension Credit is no longer available to individuals on the basis on their partner reaching the qualifying age; both partners must have reached the qualifying age (DWP 2019).
In contrast to many other European countries, it is not possible to claim a reduced level of State Pension before SPA (Lain 2016). Individuals who have reached SPA may continue in employment and claim State Pension at the same time. These individuals are exempt from paying NI contributions—a policy designed to encourage extended working life (OECD 2018). The income from State Pension is offset against individuals’ tax-free personal allowance, which is £11,850 for 2018/19.
Individuals who defer claiming their State Pension are entitled to a one per cent increase for every nine weeks of deferment (equivalent to 5.8% for a full year) (Gov.UK 2018). This increased pension is paid on top of the weekly State Pension. Deferment rules are less generous than the old State Pension system, under which each year of deferral increased State Pension by 10.4%. Previously, it was also possible to take this extra State Pension as a taxable lump-sum payment (if State Pension was deferred for at least 12 months), or as additional weekly payments.
OccupationalPensions and Auto-Enrolment
Concern about individuals’ failure to save for retirement led to a major expansion in the UK private pensions system through the introduction of ‘auto-enrolment’ into occupational pension schemes. In October 2012, employers became legally obliged to automatically enrol all employees aged between 22 and SPA, who earn at least £10,000 per annum, into a workplace defined contribution (DC) pension scheme. Auto-enrolment has led to a significant increase in the proportion of employees who contribute to a workplace pension: coverage now stands at 73% of employees, compared to around 47% in 2012 (ONS 2018a). Since 2012, more than 9.5 million workers have been automatically enrolled into workplace pension schemes, with an opt-out rate of under 10% (ONS 2018b).
The level of contributions that employers and employees are required to pay into workplace pensions has increased in stages over time, from the initial minimum contribution rate of 2% of an employee’s qualifying earnings (equally divided between employers and employees), to 8% in April 2019 (3% from the employer and 5% from the employee) (ONS 2018a). While employees have the right to opt-out of paying the increased rates of contribution, the opt-out rate has risen by less than 1% since contribution rates were increased in April 2018 (Collinson 2018). In 2017/18, auto-enrolment led to an additional £6.9bn being saved into workplace pensions, a figure projected to rise to almost £20bn in the year 2019/20 (DWP 2017e: 67). Nevertheless, evidence indicates that very few employers or employees contribute above the minimum levels required by law (ONS 2018b), leading to concerns that auto-enrolment will not provide adequate pension income in retirement (Foster and Heneghan 2017).
The introduction of auto-enrolment has led to an increased proportion of occupational DC pension schemes, and a corresponding decline in the proportion of occupational defined benefit (DB) schemes. Whereas DB schemes provide a guaranteed income, DC pensions increase individual exposure to financial risk, as the level of savings is linked to stock market performance (Foster and Ginn 2018). This shift away from DB schemes to DC schemes is consistent with an increased policy focus on individual responsibility for financial provision in retirement (Foster 2018). However, there are some key differences between the private and public sectors in terms of pension coverage and pension types. In 2017, 89% of employees in the public sector were members of a workplace pension scheme, of which almost all (93%) were DB schemes (ONS 2018a). By contrast, workplace membership rates in the private sector are significantly lower (67% in 2017), and DC schemes predominate (ONS 2018a).
Amongst full-time employees in both the private and public sectors, there is virtually no gender disparity in terms of workplace pension membership (ONS 2018a). Amongst part-time workers in both sectors, a higher proportion of women than men are enrolled in workplace pensions. Whilst this trend is encouraging, older women are nonetheless over-represented amongst part-time workers whose incomes are below the £10,000 per annum threshold for auto-enrolment (TUC 2014). Unlike the State Pension, private DC pension schemes do not provide credit for periods of unpaid caring. As such, women’s earnings-related private pension savings over the lifecourse are typically much lower than those of men. ONS figures indicate that between July 2014 and June 2016, median private pension wealth for men aged 65+ was £160,700—over twice as much as for women of the same age (£67,500) (ONS 2018c). Thus, private pensions are a significant source of gendered income inequality in later life (Foster and Ginn 2018).
In 2015, the Government launched a range of measures to offer pension flexibility for individuals aged 55+ with savings in DC pension schemes. Individuals are now permitted to withdraw all their savings as a lump sum, or purchase an annuity, or draw an income from their savings. These measures were designed to facilitate more flexible retirement pathways and encourage extended working life by allowing people to combine income from earnings with retirement savings (OECD 2018).
Employment and Health Policies
The Government’s approach to employment policies for older workers has been to combine legislation in specific areas (e.g. abolition of default retirement age) with voluntary, employer-led action to create more age-inclusive workplaces. In 2014, the Government extended the right to request flexible working to all employees who have six months of continuous service with their employer. Employers are legally obliged to consider requests for flexible working made by qualifying employees and may only refuse requests for specific reasons detailed in the legislation, such as the burden of additional costs (Pyper 2018). This action was designed to support older workers who may have caring responsibilities, yet research evidence suggests that awareness and take-up of flexible work options amongst older workers is low (Loretto et al. 2017). In June 2018, the Government launched its Carers Action Plan, in which it stated that it is considering granting dedicated employment rights to carers, many of whom are aged 50+ (DHSC 2018).
A range of stakeholders have identified best practice amongst employers of older workers (Loretto et al. 2017; WEC 2018). In 2018, the Centre for Ageing Better published five specific employer recommendations: (1) increase the range of flexible work options available to older workers; (2) minimise age bias in recruitment processes; (3) support workers with health conditions; (4) encourage career development at all ages; (5) promote an age-positive culture (CAB 2018).
UK policy relating to the health of older workers is limited. There is currently no Government provision for older workers in hazardous occupations (OECD 2018), nor is any protection offered to older employees in precarious employment. The UK does not have a disability pension, and as mentioned previously, individuals are not permitted to claim their State Pension early. Data from the English Longitudinal Study of Ageing suggests that, in 2014–2015, 6.6% of men aged between 55 and SPA reported that they were economically inactive due to permanent sickness/disability (Matthews and Nazroo 2016). Prior to 2007, Incapacity Benefit provided a route out of the labour market for those unable to work due to poor health; male manual workers commonly exited work this way (Vickerstaff and Loretto 2017). In 2007, Incapacity Benefit was replaced with Employment Support Allowance (ESA), which has more stringent eligibility criteria. Increasing numbers of older workers report that health problems have curtailed their ability to remain in paid employment. However, if they do not qualify for ESA, they may have very limited access to other sources of income until they reach SPA (Vickerstaff and Loretto 2017).
Conclusions
UK policy and practice has framed the extension of working life as a moral and economic imperative. The policy rhetoric of increased choice and freedom to work in later life does not adequately engage with potential barriers to employment in later life, such as poor health, caring responsibilities and ageism in the labour market. There has been increased focus on individual responsibility for saving towards retirement. However, women’s typical paid employment and unpaid caring patterns over the lifecourse mean that they are at greater risk of poverty in retirement compared to men, due to their systematic disadvantage within masculinised, earnings-related private pension systems.
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