more people over 65 are looking to work

The number of people working beyond the age of 65 is rising at the fastest rate since records began, official figures indicate, as thousands of pensioners attempt to boost their income in retirement.




In the last three months an extra 40,000 people over the age of 65 have joined the work force, taking the total number to 823,000. This is the highest number since the Office for National Statistics started keeping these figures in 1992.



The highest quarterly jump previously was no more than 26,000. It means that one in 12 people over 65 are now working.



The figures suggest that thousands of pensioners are going back to work to fund their slim incomes, or that they are not in a financially strong enough position to retire in the first place, according to experts. Some are also actively choosing to work longer.



They are the latest data to demonstrate how the recession has changed the face of Britain's workforce, leading to far more part-time workers and older workers, while leaving many more young people out of work for more than two years.



Ros Altman, who used to advise the Government on pensions, said: "This is a reflection of things to come. For some people working longer is not terrible.



"But if they are forced to work longer because they have to, or they have no money to fund their retirement, then this is clearly a problem. And come next year the time bomb goes off this is when the first baby boomer hits the age of 65. Then wave after wave will retire and we have to find a way to fund their pensions, and we have to do so urgently."



Last month the Government proposed scrapping the default retirement age in an attempt to keep people in the workforce for longer to ease the pensions crisis. It has also suggested that the retirement age rises to 66 far sooner than previously proposed.



The current ratio of four working adults for every pensioner will fall to three within a decade and two by 2040.



Laith Khalaf, pension analyst at Hargreaves Lansdown, the independent financial advisers, said: "Most of us want to retire as soon as possible, but many people find they just can't afford to. The state pension is just too measly, and private pensions aren't adequate enough to cover the shortfall."



The state pension is £97.65 a week, equating to an average annual income of £5,078. And according to Hargreaves Lansdown, the average private sector worker is retiring with a pension equating to no more than £2,145.



Part of the reason for the small private pensions has been because of falling annuity rates, the figure used to calculate most pensions, in the wake of the emergency measures to prop up the economy during the financial crisis.



Wilson Wong, senior researcher at the Work Foundation think tank, said: "Many people have seen their pension fall in value by 20 per cent to 30 per cent since 2008, and a lot have thought 'this is not enough to retire on. I've got to carry on working.' There will be a lot more in that position as time goes on."



Many of those working beyond the age of 65 are doing so to help support their children or grandchildren.



Emma Soames, the editor at large of Saga Magazine, said: "Many, many more people still have mortgages when they reach the age of 60 or 65. They either borrowed too much, or moved, or divorced, or remortgaged to support their children."



According to Aviva (LSE: AV.L - news) , 12 per cent of people aged 65 to 74 have a mortgage. And the outstanding amount for this age group, an average size of £59,858.



The trend for older working the number of over 65s working has doubled in less than a decade is also a reflection of the better health of many older people, as well as a desire by some to keep active.



The figures were published as part of the ONS monthly update on unemployment, which indicated the number of people in work had jumped by far more than most economists had expected.



Overall, unemployment in the three months to June fell by 49,000 to 2.46 million, the Office for National Statistics said.



The number of people in work jumped by 184,000 the largest quarterly jump since 1989 to 29 million. However, this figure included a record number of part-time workers, up 115,000, taking the total to 7.84 million.



Economists warned that the number of people out of work was likely to rise soon, once the full-scale of the public sector cuts are felt.



Michelle Mitchell, charity director of Age UK, said: "The number of people aged 65 and over still in work has been rising steadily, even during the recession. Many of them already have access to employment and simply intend to carry on working either because they find their jobs fulfilling or as it is the case for many because they need to shore up their personal finances hit by the recession.



"For tens of thousands of them, the Default Retirement Age at 65 is a pending threat and the Government should stand by its proposal to scrap it from next year.



Jim Hillage, director of Research at the Institute for Employment Studies, pointed out that public sector workers were already feeling the pinch, with fewer vacancies available.



He said: "We are now beginning to see the early signs of the public sector downturn, with vacancy numbers across public sector industries beginning to contract sharply. As these trends gather pace in the coming months, overall unemployment is likely to rise unless the recovery in the private sector will be sufficient to compensate for significant public sector job losses.



David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: While recent labour market trends are welcome, it is important to bear in mind that we have not yet seen the negative impact on jobs that will result from the tough measures announced in the Budget."



The BCC believes that unemployment will peak at 2.65 million next year.



A spokesman for the Department for Work and Pensions said: "Many older people want to work over the age of 65 and have a wealth of skills and experience that are not being used.



"We want to get rid of the default retirement age so that if people want to work they can do so. By spending longer in the workforce they can have a better pension in retirement."