Many older people who left work in 2020-21 ended up in relative poverty – report
According to research, many older people who left work in the first year of the pandemic have had to cut their food expenditure by around £60 per week (Dominic Lipinski/PA)
By John Besley,
Almost half of people aged between 50 and 70 who left the workforce during the first year of the pandemic ended up in relative poverty, according to the Institute for Fiscal Studies (IFS).
New IFS research, funded by the Joseph Rowntree Foundation, revealed 48% of people in this age bracket who stopped work in 2020–21 were in relative poverty, even though overall poverty rates declined that year.
The report warns that older people who stop working often never re-enter the workforce, meaning this group may be experiencing long-term poverty and greater hardship amid the cost-of-living crisis.
Relative poverty refers to people living in households with income below 60% of the median in any respective year.
The report suggests labour market disruptions and the early impacts of the pandemic may have ‘forced’ many workers into early retirement (Victoria Jones/PA)
According to the research, many older people who left work in the first year of the pandemic have had to cut their food expenditure by around £60 per week.
They also struggled more with their overall well-being and were less likely to receive a pension than those who had stopped working in previous years.
The research, which has been released ahead of the forthcoming IFS annual report on living standards, poverty and inequality, suggests labour market disruptions and the early impacts of the pandemic may have “forced” many workers into early retirement.
Xiaowei Xu, a senior research economist at IFS and an author of the research, said: “It is often assumed that older people who left the workforce during the pandemic were wealthy individuals retiring in comfort.
“Our analysis shows that those who left in the first year of the pandemic experienced a sharp rise in poverty, despite overall poverty rates falling that year, and also suffered large falls in well-being.
“Some of this group might well be amenable to coming back into the workforce with the right opportunities, and there are signs that some are returning already.
“If the Government wants to get this group back to work, the success of policies to support older workers, such as the mid-life MOT, will be critical.”
Older adults who left workforce in 2020–21 less likely to have access to pensions
Nearly half (48 per cent) of 50- to 70-year-olds who had recently left the workforce in 2020–21 ended up in relative poverty, research from the Institute for Fiscal Studies (IFS) has revealed.
According to the IFS, this was "significantly" higher than the percentage of individuals who were in poverty after leaving the workforce in pre-pandemic years, despite overall poverty rates declining in 2020–21.
The research, funded by the Joseph Rowntree Foundation, also found that, in 2020–21, 50- to 70-year-olds who had stopped working in the last year were less likely to receive pension incomes than those who had stopped working in previous years.
According to the research, nearly half (49 per cent) lacking access to either private or state pensions, compared with 43 per cent of those who were newly inactive in 2019–20.
This same group also cut food expenditure by around £60 per week on average, which was “much more” than those who had stopped working in previous years, who on average did not substantially change their spending upon leaving the workforce.
The IFS highlighted the findings as demonstration that many older workers who left the workforce in the first year of the pandemic were not retiring in comfort.
Instead, it suggested that labour market disruptions and the additional health risk faced by older workers may have ‘forced’ many workers into early retirement, even without financial support, pushing down their living standards and well-being.
In light of the findings, IFS senior research economist and author of the research, Xiaowei Xu, suggested that some of this group might be amenable to coming back into the workforce with the right opportunities, noting that there are signs that some are returning already.
"If the government wants to get this group back to work, the success of policies to support older workers, such as the “mid-life MOT”, will be critical," he said.
Adding to this, JRF chief analyst, Peter Matejic, said: “A high-participation, high-inclusion labour market is vital to reducing poverty. It would help households to boost their incomes, and make sure people are not excluded from the financial, social and health benefits of good work.
“This research shows many older workers were swept out of work by the coronavirus pandemic rather than this being a positive choice. Supporting people back into employment should be a priority for the government alongside ensuring that those who aren’t working can afford the essentials.
“The government needs to make sure universal credit payments when you are out of work never fall below the amount food, utilities and other essentials cost.’
The IFS clarified that these negative outcomes were only seen amongst older people who were newly inactive in the first year of the pandemic, revealing that while an “unusually large” number of people also left the workforce the following year, older workers who had recently stopped working in 2021–22 had similar living standards and well-being to pre-pandemic cohorts.
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