As the UK grapples with rising costs and an aging population, one overlooked source of economic strength is older workers. Those over the state pension age are now making a major contribution to the nation’s economy, with new research showing they add more than £60 billion annually. This figure is not only impressive, it also surpasses the projected costs of the government’s Triple Lock pension guarantee by a significant margin.
Recent studies highlight that older workers are becoming an increasingly integral part of the UK workforce, with employment rates among this group on the rise. The country’s economy is benefiting greatly from their participation, and experts argue that government policy needs to adapt to this new reality.
Economic Contribution: Over £60 Billion Annually
According to research from the Centre for Ageing Better, individuals aged 65 and above now make up one in 25 workers in the UK. Collectively, they contribute more than £60 billion annually to the economy, a figure equivalent to roughly 2% of the total GDP. This economic impact is four times greater than the projected £15.5 billion cost of maintaining the Triple Lock pension guarantee, which ensures state pensions rise by the highest of inflation, earnings, or 2.5%.
The contribution of older workers also exceeds the annual policing budget and planned increases to NHS day-to-day spending for the remainder of the decade. Tax receipts linked to these workers remain significant, with income tax and national insurance contributions from people aged 65 and over totalling around £6.8 billion each year. This figure is notably higher than the tax contributions made by major corporations such as Tesco and Amazon, according to data.
Changing Retirement Patterns and the Benefits of Working Longer
The number of older workers in the UK has reached a record 1.7 million, a trend that has seen employment among this group more than double since the turn of the millennium. In the past 12 months alone, over 180,000 people aged 65 and over have either entered or remained in employment.
According to Dr. Andrea Barry, deputy director for work, retirement, and transitions at the Centre for Ageing Better, the traditional “retirement cliff-edge,” where individuals stopped working full-time at retirement age, is no longer the norm. Instead, many older workers are motivated by the desire for purpose, cognitive stimulation, and a sense of routine. The benefits of continued employment are not only personal but can also foster more productive and innovative workplaces, as studies have shown that multi-generational teams can be highly effective.
However, not all older workers are continuing due to choice. Dr. Karen Hancock, economist and research analyst at the Centre for Ageing Better, notes that a significant portion of the older workforce is doing so out of financial necessity. Around 14% of older workers report they cannot afford to retire, highlighting the divide between those who remain in the workforce for personal reasons and those who are compelled by financial pressures.
As the number of older workers continues to grow, experts argue that government policy needs to evolve to better accommodate this demographic. Dr. Barry has called for a comprehensive review of policies affecting people in their sixties, especially around issues like ageism, health conditions, and caring responsibilities that often prevent many from continuing to work beyond the state pension age.
