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Pensions and labour-market participation in the United Kingdom

Journal article

In this paper we begin by describing the labour market behaviour of individuals around pension age. We also consider the coverage of the various parts of the social security system. We go on to explain the structure of state pensions in the United Kingdom and compute the incentives for retirement that the structure creates, focusing on early retirement and the role of disability benefits, which are especially relevant for lower-skilled workers. We compare these incentives with those facing workers with private occupational schemes who now make up the majority of older workers close to retirement. The structure of incentives is found to match well with the observed patterns of labour market participation in the data.

More on this topic

This report brings together new evidence on these issues to examine the recent trends in, and prospects for, the labour market for people in their 50s and 60s.
We quantify the impact of increasing the state pension age from 65 to 66 on household incomes, poverty and public finances, after – in particular – taking into account that some will remain in paid work at age 65 as a result of the reform.
Briefing note
This report seeks to shed new light on the fall in employment and rise in economic inactivity amongst older people in the UK, with a particular focus on those in their 50s and 60s.
Press release
The number of economically inactive people – those who are neither in paid work nor looking for paid work – in their 50s and 60s has grown by more than a quarter of a million since the period immediately before the pandemic.