Nearly half a million people approaching retirement are being prevented from working by disability or poor health, the Trades Union Congress said today.
31 AUG 2012 | THE ACTUARY NEWSDESK: NICK MANN
In an analysis of the Office for National Statistics' Labour Force Survey figures, the TUC found that employment rates for people approaching the current state pension age were low. Just over half (54%) of men aged 60-64 and 62% of women aged 56-60 are in work.
The TUC claimed this situation would get worse if plans to automatically increase the state pension age in line with longevity increases take effect. While the government has argued this change will extend working lives, the TUC said many older people are unfit or will find it hard to work and as a result will end up in a 'limbo zone' where they are too young for a pension and too old to work.
According to its analysis, nearly two in five people approaching the state pension age are defined as economically inactive having not sought work in the past four weeks. Long-term sickness and disability was cited as the main reason for them not working.
In total, 470,325 people are currently inactive due to long-term sickness and disability, compared to 375,368 defined as inactive as a result of having taken early retirement.
As a result, the TUC said it was wrong for the government to plan state pension age increases without having first addressed the health inequalities that are forcing people out of work well before they reach pension age.
It also highlighted high levels of unemployment among older workers, with nearly half of unemployed people near state pension age having been out of work for at least a year.
Brendan Barber, the TUC's general secretary, said: 'While more people are working past their state pension age, often as the only way to get a decent retirement income, a far greater number of older people are unable to work due to ill health or because they are trapped in long-term unemployment.
'Accelerating the rise in the state pension age will simply push more people into poverty. We will end up with a new limbo zone for people in their mid-60s who are too young for a pension, but too old to have any realistic chance of a job.'
Changes in the benefit system are also forcing many older people to actively look for work or risk losing their benefits, Barber noted.
He added: 'By raising the state pension age and ignoring persistent health inequalities, the government risks overseeing a dramatic rise in pensioner poverty.'