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October 03, 2014

Working one year longer could boost GDP by 1%

Working one year longer could boost GDP by 1%If everyone chose to work one year longer, gross domestic product could increase by 1% – the equivalent of £16 billion in 2013, according to government figures.

Almost a quarter of a million more people aged 65 and over have opted to stay in work since the default retirement age was abolished on 1 October 2011, according to the Department for Work and Pensions (DWP).

There are now 1,103,000 workers aged 65 and over in work compared to 874,000 in the fourth quarter of 2011 – an increase of 229,000.

An average earner working a year longer has the potential to boost their pension pot by around £4,500, in addition to earning an extra year’s salary. And, by taking advantage of flexible working, older workers have more opportunities to phase in their retirement.

Older workers are also helping to drive the current entrepreneurial surge – figures from the Office for National Statistics (ONS) show that over 400,000 people aged 65 or more are now in self-employment.

Pensions minister Steve Webb said: “In years to come, we’ll look back at the kind of age discrimination that the default retirement age represented and wonder how it was ever allowed. Forcing people to retire at 65 might have made sense in 1925 but in the 21st century it was nothing short of an outrage.”

He added: “We are now supporting older workers further by extending the right to request flexible working and providing new pension freedoms so they can combine pension income with earnings, and therefore plan a gradual retirement.”

Ros Altmann, the government business champion for older workers, said: “The evidence is clear that helping older workers stay in the workplace is not only good for their own finances but also helps create more jobs for younger people too. As older generations have extra income and spending power for the short and longer term, this can boost the outlook for the whole economy.”

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