Pros and cons of working beyond 65
People are living longer, pension pots and annuity rates are shrinking - and many older workers are realising that retirement is a luxury they cannot afford.
Receiving a carriage clock at the age of 65 and then shuffling off to tend to the garden has become a thing of the past, and it is increasingly the norm for the older population to work beyond state retirement age.
Almost 822,000 Britons over the age of 65 were in employment between June and August this year, according to the most recent government data - almost double the number 10 years ago.
The state itself is pushing us steadily towards a later retirement. Plans have been rubber-stamped to raise the state pension age to 65 for both men and women from November 2018, then up to 66 for both genders from October 2020.
Alongside this, the default retirement age was abolished at the start of October, meaning that employers can no longer force staff to retire once they reach their 65th birthday.
But money - or the lack of it - is one of the major drivers for many older people. A person retiring today is likely to end up with a pension income worth a third less than it was three years ago, according to recent research by accountants PricewaterhouseCoopers.
But Dianah Worman, diversity adviser for the Chartered Institute of Personnel and Development, points out that there are a number of complex factors also influencing recent changes in the employment landscape.
She says: "The improved health of the older population is having a significant impact, and there is an appetite amongst these individuals to continue working for reasons of status and identity, as well as economic well-being."
The value of older employees
At the same time, almost half of British firms complain that they cannot find candidates with the right skills for vacant positions, according to research from the British Chambers of Commerce.
However, enlightened companies realise that older, more experienced workers could be the way to plug this skills shortage.
The Department for Work and Pensions runs the Age Positive campaign, highlighting the merits of employing older staff.
Its research suggests that these include better retention rates, as staff over 50 are often more loyal to an organisation; improved workforce planning, with greater control over when and how people leave an organisation; and proper knowledge management, with mentoring schemes allowing older staff members to pass on their experience to successors.
Many large companies recognise the business case for employing older staff. Coca-Cola has long had rigorous procedures in place to ensure its recruitment practices are age-neutral, and it maintains that older employees are valuable for their mix of skills and as mentors to younger staff.
Fast food giant McDonald's employs a 'family and friends' contract that allows staff members from the same family or group of friends working in a particular restaurant to share and cover each other's shifts in a way that best suits them. This has proved popular with young parents, but more grandparents have also come on board and the company's age make-up has diversified as a result.
Domestic appliance insurer Domestic & General (D&G) is another example. The Nottingham-based firm has won awards for actively employing more mature staff to man its call centres. D&G argues that it makes good business sense, as customers are often reassured to speak to someone more experienced.
But evidence suggests that while more older people want to continue working, the majority would prefer to scale back their hours. Eight out of 10 people in work want to stay in employment past their expected retirement date, according to the Centre for Research into Older Workers, but only 9% would like to do so full-time.
The law has yet to catch up. The right to request flexible working currently exists for parents with children up to the age of 17 and those who are carers for an adult dependant.
But proposals to extend to all employees the right to ask for flexible work arrangements have been put on the back burner by the government, leaving older staff to rely on the goodwill and common sense of their bosses when asking for an unconventional work arrangement.
Some protection exists since the removal of the default retirement age in October 2011, in that older staff can no longer be forced to retire. Employers who flout the rules could expose themselves to legal redress on two fronts, according to David Whincup, a partner in the labour and employment team of law firm Squire, Sander & Dempsey.
"An older person pushed out of work in these circumstances could have two claims. One for unfair dismissal which carries a payout capped at £70,000," he explains.
"But if the individual could prove that they were let go for being too old, that would qualify as age discrimination where the payout is uncapped. The amount paid would be calculated as compensation for the losses incurred; if someone could sensibly argue that they intended to work until they were 80 and they will struggle to find another job now, that's a payout for 15 or 20 years of lost salary."
Even before the abolition of a default retirement age, a cultural shift had occurred, according to Sally Brett, equality policy officer for the Trades Union Congress. "Unions and employers have been talking about different approaches to retirement and alternative ways of working for older employees since age discrimination legislation was introduced in 2006. The key seems to be flexibility.
"However, we shouldn't forget the large proportion of people who work in physically and emotionally demanding jobs, who don't want to or practically can't continue working into their late sixties and seventies. Revisions to the state pension age plus poorly performing private pensions have put them in a terrible position," she says.
The harsh reality is that for those who are over 50 and out of work, the prospects of finding a job are poor. The latest employment figures show that 5% more over 65s were registered unemployed in the three months to August this year than the previous quarter. Chris Brooks, the charity Age UK's employment policy expert, points out that a lot of employers and recruiters still demonstrate bias when considering older job candidates.
"For those who are 50 plus, it is harder to find work than for any other age group," he observes. "There is a disjointed approach by many employers - increasingly they recognise the value of older employees, but too many still believe negative stereotypes about older people being less willing or able to adapt and learn."
One way for older jobseekers to confound these low expectations is to consider further training. Brooks adds: "An older person who has taken the initiative to brush up their skills or retrain is sending out a strong message to a potential employer about their ability and attitude."
The government-backed Learndirect initiative and charities such as the Age and Employment Network and the National Institute of Adult Continuing Education provide information about education and training courses, including those for the over 50s.
However, Britain already has an ageing workforce, and if employers don't recognise and respond to that fact then they will restrict the talent pool they can access, and they will lose out.
There are a lot of skills and experience in older job candidates - if companies are only prepared to look.
What are your options?
Though the right to request flexible working has not yet been extended to older workers, ask your employer about the possibility of coming in on a part-time basis, doing a job share, or working from home for a few days a week. Since the removal of the default retirement age of 65 it is in companies' interest to consider all sensible suggestions.
Also think about self-employment. Could you do work for an existing employer on a consultancy basis? Is it time to set up your own enterprise?
If you are interested in being your own boss, you could contact the Prince's Initiative for Mature Enterprise (PRIME, prime.org.uk, 0800 783 1904) or Business Link (businesslink.gov.uk, 0845 600 9006) for further help.
If money is not an immediate concern, look at volunteering. As well as being a rewarding activity, it could also provide you with vital experience to help you into a paid job later.
REACH (reachskills. org.uk) is a charity that pairs skilled volunteers with voluntary organisations, while the Retired and Senior Volunteer Programme (RSVP, csvrsvp. org.uk, 020 7643 1385) assists over 50s to volunteer in their local area.
In exchange for any lump sum – usually your pension fund – an annuity is “bought” from an insurance company and provides an income for life. When you die, the income stops. Annuity rates fluctuate daily and depend on your sex (although from 21 December 2012 insurers will no longer be able to use gender as a factor when calculating annuities), age, health and a number of other factors, so you have to pick the right one and, once bought, its terms cannot be altered, so seek financial advice.