There are a record number of workers over the age of 50 in the UK – more than 10 million.
I hesitate to call this group “older workers”. Recent research found that most of us believe “old age” begins at seventy, and the older we are the older we believe “old age” begins. If you are seventy, you believe “old age” begins at 80.
Putting labels to one side, this growing population has major implications for individuals, employers, advisers and the country at large.
Why are we working longer?
A longer working life may not be celebrated by everyone, but it is being driven by the good news that we are living longer.
The long-standing state pension ages of 60 for women and 65 for men were set in 1940 when we could expect an average of ten years in retirement. Today, we can look forward to twenty years or more.
Our rising state pension age
This change has not gone unnoticed by governments. Since 1995, British governments have been increasing our state pension age.
This policy will never be a vote winner. It requires governments to look to the longer term – beyond the five-year election cycle. Some may argue it was wrong for governments to wait 55 years before taking the first step, in 1995, but at least they are now stepping.
By the end of this year the state pension age for men and women will be equalised, for the first time, at 65. It is then set to increase to age 68 for all from 2039. This latest timetable was guided by an independent government review led by John Cridland in 2017.
Cridland’s mid-life MOT
Cridland acknowledged that setting the state pension age is the easy bit. The harder bit is supporting people as they embrace this longer working life.
Today, the UK is far from making the most of this longer working life.
Employment participation rates ride at over 80% up to the age of 50. They then crash to less than 50% by the time we reach retirement. We are not living a full working life.
Cridland floated the idea of a “mid-life MOT” in 2017 to encourage people to “take stock, and make realistic choices about their work, health and retirement”. The mid-life MOT was floated, and left floating with little definition. In 2018, Aviva decided to put meat on the bones of the idea by developing its own mid-life MOT .
Why has Aviva piloted a mid-life MOT?
Aviva has three motivations to pilot the MOT.
First, as one of the leading retirement businesses in the UK and we understand that working longer is a lever most of us can pull to support our longer lives.
Secondly, we recognise that the over-50s are our fastest growing employee population. We want to invest in our people.
And finally, our UK chief executive, Andy Briggs, is the government’s business champion for older workers and he wants to lead by example.
What is Aviva’s mid-life MOT?
In summer 2018 we invited employees in the 45-to-60 age cohort to a series of seminars that considered the wealth, work and wellbeing needs of people in mid life. Some 100 employees were invited and 94 attended. There is a definite demand for a mid-life MOT.
For employees, we have learnt that the mid-life MOT can boost confidence in their mid-life plans. We have learnt that it can boost appreciation of Aviva as an employer and boost their likelihood to keep working.
For Aviva as an employer, we have learnt the importance and value of employee retention. The average length of service of an Aviva employee in this age group is twenty years. That is twenty years of knowledge, experience and corporate memory. It can cost over £30,000 to replace an experienced employee. The value of retention is huge.
Today, we have more than three people of working age to support every one of state pension age. This is projected to fall to nearer two-to-one over the coming century. This represents a 50% increase in the weight on the shoulders of working people. The UK will need as many working people as possible to lighten the load. The need for a mid-life MOT will grow.
What next for Aviva’s mid-life MOT?
The benefits of the mid-life MOT are strong. This autumn Aviva will announce the future of its mid life MOT. We will also share our learnings with government. For the good of employees, employers and UK plc, we all need to invest in a fuller working life. The mid-life MOT can be that investment in action.
Alistair McQueen is head of savings and retirement at Aviva