‘It’s a problem!’ Britons’ early retirement mass exodus puts strain on inflation

Pension: Parry believes rich OAPs should hand back increase

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

Many older workers are now becoming what is known as “economically inactive”, where they are neither in work or looking for work. However, according to Clare Lombardelli, Chief Economic Advisor at the Treasury, this could have major economic implications. 

Speaking at King’s College London, Ms Lombardelli addressed the phenomenon known as “The Great Resignation”.

She stated this had been significantly fuelled in the UK by those in their 50s and 60s leaving the job market.

The expert warned the UK is one of the only countries where inactivity amongst this age group of workers is higher than pre-pandemic levels.

The idea of economic inactivity means a person is neither in work nor actively searching for work.

While the number of older people who were economically inactive had fallen steadily in the decade prior to the pandemic, according to the Institute for Fiscal Studies, the trend has reversed.

Ms Lombardelli explained: “This is a human problem. 

“Economic inactivity can be damaging to individuals, risking lower living standards, lower retirement income, and potentially poorer physical and mental health.”

However, Ms Lombardelli also stated there are major implications for the macroeconomy as a result of early retirement.

DON’T MISS
Rishi Sunak’s move means Britons reckon with ‘increased tax burden’ [INSIGHT]
Pensioner ‘millionaires’ rise to 3 million – triple lock questioned [ANALYSIS]
TV licence fee plans could see property-rich pensioners ‘pay more’ [UPDATE]

A fall in labour, she explained, limits the potential size of the economy.

As a result, early retirees are increasing the pressure on inflation. 

The latest estimates show UK employment is some 460,000 people below what was expected – with a sharp rise in economic activity.

The increase in inactivity amongst older age groups was witnessed in most regions, and across all education levels. 

Ms Lombardelli added that the emerging evidence also shows this is not confirmed to individuals who “can leave work in their 50s and 60s and enjoy a financially comfortable retirement”.

The Institute for Fiscal Studies has previously analysed some of the reasons for economic inactivity amongst an older age group.

One reason cited was individuals no longer being able to work due to health reasons such as long Covid, while another was that a trend towards remote work may have prompted some individuals to take early retirement.

Increased wealth during the pandemic due to a lack of spending may have also motivated people to leave the workforce early. 

If choosing to retire early, Britons will wish to know about their own finances, and the steps they can take.

What is happening where you live? Find out by adding your postcode or visit InYourArea

Of course, savings can be accessed at any time, unless in a fixed rate account, but there are rules when it comes to pensions. 

The earliest Britons will be able to get their state pension is at state pension age, so early retirement means having to wait for this.

When a person is able to take money from their pension pot depends on the individual rules of their scheme, however, it is usually after the age of 55.

Some may be able to take money out earlier if they have ill health, or had the right under the scheme they joined before April 6, 2006 to take a pension before 55.

The Government website warns: “Some companies offer to help you get money out of your pension before you’re 55. This could be an unauthorised payment.

“If it’s unauthorised, you pay up to 55 percent tax on it.”

Source: Read Full Article