UK government unlikely to tempt retirees back to work, report says

Many workers in the UK have retired since the onset of the Covid-19 pandemic. Bloomberg.

Britain's government is unlikely to convince people who retired early during the Covid-19 pandemic to go back to work as most are better-off and few make the return after lengthy periods outside the labour force, a think tank has said.

The Resolution Foundation, which focuses on issues affecting low and middle-earners, urged the government to focus on tackling issues such as the high cost of childcare and job support for workers with poor physical or mental health.

Britain has reported a surge in the number of working-age people who are no longer in the labour market since the onset of the Covid-19 pandemic in 2020, prompting concern from both the government and the Bank of England.

Conservative Chancellor Jeremy Hunt — who last month told The Times newspaper that people aged 50 and above should aspire to more than playing golf — is considering measures to boost labour force participation before the presentation of his March 15 budget.

“We need to reboot progress on getting people into work, but we're not going to achieve it by persuading the recent Covid cohort of older workers to 'unretire',” Resolution Foundation economist Louise Murphy said.

“Instead, we need to do more to encourage mothers in low-income families into work, and help people who need to take periods of time-off for ill-health stay attached to their jobs.”

Only one in 10 people aged 55 to 59 who left the workforce after the onset of the pandemic is claiming welfare benefits, so changes to eligibility rules are unlikely to bring many back as workers, the think tank said.

People who had been out of the labour force for two and a half years — as is the case for those who retired in mid-2020 — historically had only a 2 per cent chance of returning to work in the next three months, it said.

If the government wants to make early retirement less attractive in future, the Resolution Foundation said it should consider increasing further the minimum age at which people can gain access to funds they paid into private pension plans.

This currently stands at 55 and is due to rise to 57 in 2028.