Phoenix Insights, Phoenix Group’s longevity think tank, has published research exploring economic inactivity among the over-50s in Scotland since the start of the Covid-19 pandemic.
Latest official figures show around 346,000 people aged 50-64 are currently economically inactive in Scotland (44% of total economic inactivity among 16-64 year olds), the highest number since comparable records began. This is part of a wider UK picture where over 3.5 million people in this over 50s age group are currently economically inactive.
Phoenix Insights reveals over half (52%) of over-50s in Scotland who have left the workforce since the pandemic cite early retirement as their main reason for leaving. When compared to the rest of the UK, only the South West (57%), South East (54%) and East of England (55%) have a higher proportion of people who give this reason.
Sickness and disability are also significant drivers for over-50s leaving the workplace early in Scotland. Almost one in five (19%) of this group have left work since the beginning of the pandemic due to ill health or disability. This is slightly higher than the UK average (18%).
While some over 50s will have enough additional resources to meet the income requirements of early retirement, many who leave work before state pension age – particularly due to ill health or caring responsibilities – are financially vulnerable and, at current savings levels could be left short of money in retirement. 31% of adults in Scotland have no pension provision at all.
Phoenix Insights says there may also be a proportion of over-50s who have chosen to retire early but are now looking to re-enter employment amid the cost-of-living crisis and to make up any potential gaps in savings they’ve identified. The average pension wealth among 50-64 year olds in Scotland is £157,500, which is almost £100k short of what is needed for a ‘moderate’ retirement income if retiring at the state pension age4. For the many over 50s in Scotland retiring earlier than the state pension age, they would need to have saved even more to fund a ‘moderate income’ in retirement.
Catherine Foot, director of Phoenix Insights, said: “Economic inactivity across the UK has remained stubbornly high since the coronavirus pandemic, with over 300,000 individuals between 50–64 currently out of work and not looking to return. Across Scotland, a majority of these individuals have taken early retirement, while others have left the workforce due to ill health, job dissatisfaction, or caring responsibilities.
“It’s important not to dismiss economic inactivity among this group as a case of rich baby boomers choosing to enjoy time on the golf course. Stereotypes like this mask real financial and health vulnerability among a group whose successful return to employment is critical to the UK’s productivity and prospects for economic growth, and hugely beneficial to support people’s long-term finances. Around one in three people in Scotland have no pension provision at all, and at current savings rates, many will fall short of a decent standard of living in retirement.
“The UK government announced several measures to encourage over 50s back to work in the Spring Budget, but more targeted action is needed. To enable those in their 50s and 60s to remain in meaningful work for longer, we need to make work more accessible for a wider group of people, with greater flexibility and opportunities to recruit, retrain and retain colleagues.”
