Why more people than ever are working beyond retirement age

The number of people working beyond retirement age in Ireland has reached record levels, the latest CSO labour force figures show, with housing and the increased cost of living key factors behind the growing number of over-65s staying in the workforce, according to Age Action.

“People are carrying debt into their older age at a higher rate than we had done before because people have mortgages that are not necessarily paid off,” says the organisation’s head of advocacy, Celine Clarke.

“And then there’s the fact that the State pension has consistently fallen behind the rate of inflation, and so what we also see is more older people falling into poverty or at risk of poverty and deprivation. So more of those who can work are trying to work because they need to make up the difference between the cost of running their home and what the State pension gives them.”

[ ‘You can’t pay rent out of a non-contributory pension, so working is a necessity for me now’ ]

Last week’s CSO figures show 107,300 people aged 65 or over to be working in the first quarter of 2023, an increase of more than 1,000 on the previous highs recorded last year and a substantial jump on the 91,900 recorded in the fourth quarter of 2019, the last full quarter before the pandemic.

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One likely factor is the 2014 change to the age at which the State pension is paid, from 65 to 66, a product of the EU-IMF bailout. The abolition of the transitional pension, paid until then to those leaving work at 65 for that year, left many people in the position of having to seek to claim benefits for a year before their State pension became available if they stopped working upon turning 65.

Researchers, including Prof Alan Barrett of the ESRI, have traditionally found better-educated men to be particularly well-represented among those working into their late 60s and 70s, with more than half such workers tending to be self-employed.

Prof Barrett previously found that a portion of these continued working in order to address inadequate pension provision.

Financial concerns about meeting day-to-day living expenses, simply making ends meet – that was the primary reason for remaining in or going back to work

—  Dr Catherine Elliott O’Dare, Trinity College Dublin

Now, says Ms Clarke, “we also see more older women re-entering the workforce, often after having taken time out for caring duties, both to make an income but also to bring up their pension contributions to be able to qualify for the full contributory State pension which, unlike the non-contributory version, is not means-tested”.

The population’s generally better health into later life is clearly a factor too, with more people physically capable of working on and, in many cases, wanting to maintain social connections, a considerable amount of research suggests. In a 2015 European Working Conditions Survey, 20 per cent of those surveyed across all age groups said they wanted to continue working “as late as possible”.

For many, however, it seems necessity ends up being an important part of the motivation.

“I think financial needs and concerns were factors for every older worker that we spoke to,” says Dr Catherine Elliott O’Dare of Trinity College Dublin, who co-authored a Geary Institute report, Lower Paid Older Workers, last year.

“Financial concerns about meeting day-to-day living expenses, simply making ends meet – that was the primary reason for remaining in or going back to work,” she says.

A shortage of workers in many sectors as well as the raising of the retirement age for civil servants and public sectors employees to 70 has significantly increased the range of available opportunities.

[ State pension: How do I qualify and how much will I be entitled to? ]

“There’s more flexibility coming into the market,” says Mary Connaughton of the Chartered Institute of Personnel and Development (CIPD), “because at the operational end, it’s harder to get people to actually do that work. We’ve seen that in hospitality and events.”

Sectors such as retail have also seen particular value in the experience older workers can bring to a role, she says. “They can bring a level of maturity to the conversations and first-hand knowledge to the decisions that buyers are making, and so generally we are seeing more openness by employers to take on people, particularly on a part-time basis.”

This, says Prof Barrett, is an important factor, with many older workers, he suggests, seeking accommodations to make continued involvement in the workplace more attractive or practical.

“For many people, companies engineering things to allow them to stay in the organisation while sort of stepping back a little bit – that would be a positive.”

Barriers remain, with some jobs particularly challenging for older workers, and some employers seeing younger workers as preferable

Part-time working, he suggests, is an obvious factor, but he cites the example of a German factory in which the owners provided more seating and other practical physical supports for older workers.

“It was a situation in which the company realised that there are no younger workers and if they didn’t facilitate the physical demands of older workers, they were just going to have to close down,” he says.

Barriers remain, however, with some jobs particularly challenging for older workers, and some employers seeing younger workers as preferable. That may be changing in some instances, but even where companies seek to keep people on longer, they often prefer to maintain mandatory retirement ages than use fixed-term contracts.

An employment conference run by employers’ organisation Ibec recently heard that in a survey, 248 out of 300 firms had mandatory retirement ages, but 184 had used fixed-term contracts to keep older workers on.

Many companies were happy to extend the employment of older workers within the current legislative framework, the conference heard, but there is also some concern about the impact of future measures rooted in EU social policy on intergenerational fairness that may further restrict the use of mandatory retirement ages and strengthen the position of those wanting to stay on longer in the workplace.

[ Fiona Reddan: Dividing up the pension pot when a marriage breaks down ]

The suggestion on the day that the use of a second fixed-term contract required careful legal consideration indicated that it is likely to be employers rather than employees who shape the terms of such extensions.

The Irish Congress of Trade Unions argued for legislative change to address a number of the issues involved in its submission to the Pensions Commission, which did recommend “aligning retirement ages in employment contracts with the State pension age, by introducing legislation that allows but does not compel an employee to stay in employment until State pension age”. This, the Department of Enterprise, Trade and Employment says, is scheduled to happen in 2024.

Meanwhile, the rise in age-related equality cases at the Workplace Relations Commission (WRC) from 186 in 2021 to 514 last year points to a growing willingness by older workers who felt they had been discriminated against to fight their corner – something Ms Clarke says Age Actions believes should be supported.

“It’s positive to see people using the legal framework that’s available to them to challenge age discrimination in the workplace,” she says. “But unfortunately, taking cases to the WRC falls outside of the free legal aid scheme, so people will have to have the means to either pay for representation or the capacity to represent themselves. That’s something we would like to see changed.”