State Pension Gap Fuels Rise in Over‑65 Employment in UK

TL;DR: Rising living costs and an inadequate state pension are pushing many Britons into work past traditional retirement age, with women disproportionately affected. While some stay employed for purpose and health, financial necessity drives the trend for others.

Context Over the last twenty years the share of workers aged 65 and older in the UK labour force has climbed from about 8% to nearly 13%, according to ONS data. This shift coincides with a gradual rise in the state pension age from 65 to 66 and a scheduled move to 67 by 2028. At the same time, inflation has outpaced the annual pension increase, eroding the real value of the weekly benefit.

Key Facts Mandy Kemp, a 70‑year‑old practice manager from Dover, told the BBC that her state pension would not cover rent and living expenses, saying “I only have a state pension, and it wouldn’t pay the rent and my living costs.” She works three days a week to support her husband, who cannot work for health reasons. Jackie Haynes, who will turn 80 this year, described her part‑time role as an activity coordinator at a Sussex care home as a source of purpose and friendship, adding “It keeps me young.” She notes that she does not need the money financially, but enjoys the extra income for leisure.

Market data shows that pension‑related equities have reacted to the cost‑of‑living pressure. Legal & General (LGEN.L) holds a market cap of roughly £12.3 billion and its shares slipped 1.2% after the latest CPI print showed inflation at 6.7%. Aviva (AV.L), valued at about £9.8 billion, edged up 0.8% as investors anticipate higher demand for private retirement products. The FTSE 100 index traded flat at 7,620 points, while the UK 10‑year gilt yield rose to 4.3%, up 15 basis points over the past month, reflecting higher borrowing costs that affect annuity pricing.

What It Means The combination of a higher pension age, insufficient state payouts, and rising housing costs creates a financial imperative for many to remain employed. Women, who are more likely to have taken career breaks for caregiving and to have accumulated smaller private pension pots, bear a larger share of this pressure. Employers may benefit from retaining experienced staff, but they also face challenges in adapting roles for older workers and managing potential health‑related absences. Policymakers will need to weigh the adequacy of the state pension against fiscal constraints, while individuals increasingly rely on continued work or private savings to bridge the gap. Watch for the ONS quarterly labour market release later this month and the upcoming autumn statement for any adjustments to the state pension triple lock.