State pension age increase has driven up employment rates
An increase in the state pension age for women has had an impact on the employment rates of women and their partners, according to research carried out by the Institute for Fiscal Studies (IFS).
Legislation passed in 1995 is raising the earliest age that women can claim a state pension from 60 to 65 in stages between April 2010 and March 2020. Looking at data from the first two years of this change, in which the age increased to 61, the IFS report found that women's employment rates at 60 had increased by 7.3 per cent. The employment rate of their partners also went up, by 4.2 per cent, suggesting that the increase had had a knock-on effect. Meanwhile, there was a 1.3 per cent increase in the proportion of women who were unemployed and actively seeking work at age 60.
Analysis found that the rise was not significantly different between various groups of women, such as public and private sector, home owners and renters, and so on. Instead the authors thought the rise had come about through a combination of a 'shock', with many women failing to adjust to the increase in state pension age until reaching 60; and a 'signal' with the state pension age signalling when it might be an appropriate time to retire.
The report estimated that increasing the state pension age by a year had saved the exchequer £2.1 billion, both from reduced spending and from the boost to tax revenues from income.
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