Rising pension age for women keeps men working longer
According to Institute of Fiscal Studies data from the first two years since the female state pension age began to rise from 60 in April 2010, employment rates among 60 year old women have increased by 7.3 percentage points.
There are now 27,000 more women near retirement age in work than before and increasing numbers of men also choosing to work longer so that they can retire with their partners.
There are now 8,300 more men in work than otherwise would have been, with the report suggesting that this could be the direct result of women staying in work for longer.
The IFS predicts that future increases in the state pension age will lead to a substantial increase in women remaining in employment and will strengthen public finances. It estimates the UK economy has already been boosted by £2.1bn due to this.
Jonathan Cribb, a research economist at the Institute for Fiscal Studies, 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. Taken together, there were 35,000 more men and women in work as a direct result of the increase in the female state pension age -from age 60 to 61 – that occurred between April 2010 and April 2012.
“So, despite the weak performance of the UK economy over these two years, many have been able to limit the loss of state pension income through increased earnings.”
The employment rate for 60 year old women rose from 41.5% to 51.4% between the first three months of 2010 and the second three months of last year, despite the weak economy making finding and remaining in work harder.
The IFS says increasing the state pension age does affect the financial return to remaining in paid work.
However the size of the effect suggests that things other than these pure financial incentives are at work for increasing number of people choosing to stay in employment.
Women may be using the state pension age as an “anchor” in making their retirement decisions, with the change in pension age changing social norms.
There is aloso evidence that some women did not realise in time that their state pension age was no longer 60 and so did not take action, for example to increase saving, to offset the effect.