Tag Archives: Ageing

Reform and retirement: pension lessons from Finland

Pension reform is taking place in countries around the world. Governments, businesses and individuals have gradually come to terms with the fact that one of the consequences of us all living longer is that existing pension arrangements are unsustainable. As a result, millions of workers are being encouraged, nudged or, in some cases, forced to work longer. But what if reforms don’t work or have a different impact from that intended? Tarani Chandola from the ESRC International Centre for Lifecourse Studies and University of Manchester has been analysing the complex interplay between pension reform and our health and their combined effect on the timing of retirement.

We all need to work longer and retire later! Those are the essential messages coming from Governments around the globe. Turning those messages into concrete change that can make pension systems sustainable, however, is no straightforward matter, especially when you take into account the health problems that older workers can face.

The combined impact of pension age policies and our health on our decision to retire and the complex way those things play out are not very well understood. Many people stop workingbecause or ill health or caring responsibilities. Changes in the age when people can claim their state pension, which is increasing in the UK, could deter people from retiring when they perceive they need or want to.

Our research took a close look at pension reforms introduced in Finland in 2005, where, in place of a fixed statutory retirement age of 65, workers were given the choice of retiring between the ages of 63-68. The central goal of the reform was to ensure the sustainability of the pension system and to promote longer working lives. To try to get more people retiring at the top end of that age range, financial incentives were introduced for those who opted to retire later.

We looked at people who retired before and after the reforms to see whether the changes to the system had the desired effect of getting people to work longer. We also wanted to see if people who opted for early retirement (between the ages of 63-64) tended to be in better or poorer health.

Health issues linked to retirement

Our research made use of information from the medical and retirement records of more than 20,000 men and women born over a 9 year period. As far as their health was concerned, we focused on issues most closely linked with retirement such as circulatory disease and bone and muscular problems like arthritis as well as mental health problems. We were also able to access records of the sorts and quantities of prescription medicines that people were taking in the run up to retirement.

Looking at the pre-reform group, there was a clear decreasing trend in retirement by age 63 and by age 64. Among the post-reform group, there was no clear trend, but each birth cohort was substantially more likely to have retired by the age of 64 than those in the pre-reform cohorts. In fact, workers subject to the new system were 50% more likely to retire age 63-64 than those in the old.


Although retirement was generally more common among people with poorer health, as we thought would be the case, it was striking that the increased numbers of people retiring early in the post reform group tended to have better health.

In short, the reform encouraged more people to retire earlier. Those in poor health were just as likely as before to retire early, but among people with better circulatory, muscular, bone and mental health, retirement at 63-64 increased substantially. Even when we took a range of other factors into account, such as their social and economic circumstances and their education, their good health was a strong predictor of retirement.

Unintended consequences

A more flexible retirement age, in Finland’s case, has had the unintended consequence of encouraging more, not less people into early retirement. Many of those were people in good health, the sorts of workers who might have several healthy working years ahead of them – the sorts of people the Finnish Government would have hoped would retire later.

Further reform is already on the cards for Finland in 2017 and is likely to see the lower age of statutory retirement raised to 65 and after that linked to life expectancy.

Here in the UK, we have seen the raising of the State Pension Age to 67 for men and 65 for women with further changes slated for the future. Only time will tell if it has the desired effect of keeping people who otherwise might have retired earlier in work or whether other factors, such as an individual’s health will play a stronger role in those decisions.

Our study shows that, regardless of what is happening with pension reform and policy, those in poorer health are unlikely to be able to extend their working lives no matter what, something Governments everywhere need to build into their thinking about pension reform.

Further information

Health as a predictor of early retirement before and after introduction of a flexible statutory pension age in Finland is research by Taina Leinonen, Mikko Laaksonen, Tarani Chandola and Pekka Martikainen

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Who works post State Pension Age?

Across Europe and indeed other parts of the world, we’re being told we need to work longer than in the past. The reason? We’re all living longer and pension systems everywhere are collapsing under the strain. But with age can come poorer health and reduced physical capabilities and what if doing our job is physically or mentally demanding? Raising the State Pension Age for this group of workers compared say with someone working in a less stressful job could end up creating pressure on specific disadvantaged groups, whilst favouring already advantaged groups. Morten Wahrendorf from the University of Dusseldorf and ESRC International Centre for Lifecourse Studies has been investigating.

A number of Governments across Europe have already increased the state pension age beyond 65 and are actively looking to introduce incentives and measures that they hope will get more people of working age to retire later.

Quite a lot of research has looked at what things are going on in people’s lives that might lead them to retire early from work, but far fewer questions have been asked about what might lead to someone working beyond state pension age. What sorts of jobs do they tend to do? What are their working conditions like? How do those compare with people who retire earlier?

It’s important to get a grasp of this if we are to ensure that any changes made to the pension system are fair and just and that they don’t adversely affect specific or already disadvantaged groups.

Using information on nearly 18,000 men and women aged 65 and over from 16 European countries we were able to look into this in some depth and effectively compare prior working conditions of those people who retired early with current conditions of those who worked longer.

Work and conditions

Our information came from the Survey of Health, Ageing and Retirement in Europe (SHARE). We looked at whether the participants were employed or not, their job (at the time of the survey and immediately before retiring), how long they had been doing their job, working hours and how stressful their job was.

In addition we looked at what the participants said about how much freedom they had at work, whether there were opportunities to develop new skills, whether their job was physically demanding or time-pressured and how supported and recognised they felt at work.

As far as survey participants’ health was concerned, we were able to see how they rated their own health, whether they were depressed, their quality of life, and how mentally and physically capable they were.

Workers better-off and better-educated

Of everyone we looked at in the study, 755 (4.3 per cent) were still working between the ages of 65 and 80. They tended, on average, to be better off and better-educated than those who had retired.

Those still working were three times as likely to be self-employed as our retired group, who were also less likely to have been in a managerial or professional job before retiring.

Those who had retired reported higher levels of stress in their last job, particularly when it came to how valued and supported they felt. They also had poorer health across the board on all the measures we looked at.

Figure 1. Prevalence of poor health by labour market situation among older men and women (aged 65 to 80 years) in percentage (n=17625


These findings were still seen even after accounting for a host of other factors including their sex, education, whether or not they were in a relationship, if they had children and how well off they were, and also country affiliation.

There is robust evidence here that across Europe people who are likely to work longer are those who are self-employed or in a good job where they are in control and feel well supported and valued. They are also in better physical and mental shape than their retired counterparts.

Raising the State Pension Age or offering tax incentives to people to work longer may well favour certain groups who are already doing better than their peers in a number of ways. It could also place increased pressure on people already in poor health and in poor quality jobs.

All this needs to be taken into account by Governments looking to plug the pensions gap and by employers who will need to provide good jobs in a better, less stressful working environment if their workers are to remain productive post 65.

Further information

Photo credit: Fish, nico_enders

Empower employees! They will retire later

Working longer has become a policy priority in recent years, but how can people be actively encouraged to retire later? What needs to change in the workplace in order to persuade people to extend their working life? UCL’s Ewan Carr, as part of the renEWL project, has been looking at survey information from the English Longitudinal Study of Ageing (ELSA) to see what matters to older workers when it comes to deciding whether or not to retire.

Rates of employment among older workers (aged 50-64) may have increased in the last decade or so, but across Europe, significant numbers of people in this age group continue to retire before the statutory pension age. In fact, more people retire before statutory pension age than after it.

For policymakers seeking to change that position, and for businesses looking for how best to modify the workplace to help achieve it, a better understanding of the drivers behind early retirement is essential.

Job demands and conditions

We looked at the working lives of nearly 3500 members of the ELSA study to see whether the demands and conditions of their job influenced the preferred and actual timing of their retirement. We focused on the mental as well as the physical demands of their job.

We anticipated that those with physically and mentally demanding jobs would prefer and, where possible, opt for early retirement, whilst those with fulfilling jobs, with decision making powers, support and recognition, good career opportunities and financial reward would be happy to work longer.

Participants in the study were asked how physically demanding their job was, how much time pressure they were under at work, how much control they had and to what extent they felt supported and recognised.

After taking a range of factors into account, the mental demands of a job, control at work and low recognition were the most influential when it came to retirement timing preferences.

Retirement preferences

We found that employees who reported having to ‘work very fast’ or being under time pressure preferred to retire 3 months earlier than those who said this was not the case. Employees who reported having low levels of control at work and low recognition wanted to retire around 5 months sooner than their peers.

The likelihood of actually stopping work (as opposed to wanting to stop work) was also influenced by levels of decision control, support and recognition. Employees with high levels of control were less likely to stop working, compared to those with low levels of control. Employees who felt poorly supported or that their work wasn’t recognised were also more likely to give up work.

It seems that even though a mentally demanding job might lead someone to say they would like to retire early, this doesn’t always lead to them leaving work. Other factors, besides the workplace environment, may prevent older workers from retiring when they want to.

Those who want to keep working might end up retiring early due to poor health or caring responsibilities. On the other hand, employees who want to retire early (due to the demands of work) might lack the necessary pension or financial savings to make this possible.

Our findings indicate that increasing job control from low to high could postpone retirement preferences by as much as two years – a clear indication that modifying the workplace could and should be a focus for policymakers and businesses aiming to extend working life.

Working conditions as predictors of retirement intentions and exit from paid employment: a 10-year follow-up of the English Longitudinal Study of Ageing is research by Ewan Carr, Gareth Hagger-Johnson, Jenny Head, Nicola Shelton, Mai Stafford, Stephen Stansfield and Paola Zaninotto. It is published in the European Journal of Ageing

Photo credit:  Hiroyuki Takeda

Are permanently sick people less sick nowadays?

Brexit aside, there have few topics more hotly contested in recently years than who should get incapacity benefits. The steady rise in the incapacity benefits bill over several decades led some to question whether greater numbers of people could actually be sick and whether this group is actually healthier, with less serious health problems, than had been the case in decades past. But what does research evidence tell us? Bola Akinwale from Public Health England and colleagues at the ESRC International Centre for Lifecourse Studies have looked at 30 years’ worth of data to see.

In the last 30 years of the 20th century, life expectancy for those aged 65 increased more than it had in the previous 70 years. A job market that had been almost completely dominated by men became dramatically more diverse. By the turn of the century, very few men aged 60-64 were in paid work, although that number has since increased.

On the face of it, many of these changes represent good news, but they have also created new challenges around funding pensions and how to keep increasing numbers of older people healthy and active for longer.

Our research looked at the proportions of men and women around State Pension Age who were employed, unemployed, permanently sick (those we might expect to claim incapacity benefits) or retired. We went on to look at their health immediately after retirement age to see if they had died prematurely or had a limiting long-term illness or disability.

When we compared the labour market positions of 60-64 year-old men in 1971 compared with 2001, we saw some big changes:

  • Working – 78.4 percent v 47.5 percent
  • Retired – 7.2 percent v 24.7 percent
  • Permanently sick – 9 percent v 19.7 percent

By 2001, women were almost as likely as men to describe themselves as retired after State Pension Age and 12.4 percent of 55-59 year-old women described themselves as permanently sick in 2001 compared with 3.4 percent back in 1971.

So we see the proportions of permanently sick men doubling over 30 years and quadrupling for women.

Across the same time frame, the risk of dying just before State Pension Age decreased substantially – by more than 60 percent for men and by more than 50 percent for women, irrespective of whether they are in work or permanently sick. In other words, both groups benefited equally from these changes – staying healthier and living longer than their counterparts 30 years previously.

Are sick people less sick nowadays?

 The answer is no and yes – it depends on the comparator.

To try to get to the bottom of this idea that people who are permanently sick are less sick than their historical predecessors, we compared the likelihood of them dying prematurely with that of their working peers.

On the one hand, if they were less sick, we would expect to see the gap between the chances of dying prematurely for these two groups get smaller over the 30-year period. We don’t see that.

Permanently sick men aged 65-69 were three times more likely to die prematurely than their working peers in 2001 and this was an increase on the 1971 figure. For women, the figure was between four and five times over the period we looked at.

On the other hand, it’s clear that this 30 year period brought about some remarkable changes in the working lives and general health of older people, including among permanently sick group. Their life expectancy has increased in line with other people of their age.

But despite these improvements in life expectancy among permanently sick people, compared with employed people their likelihood of dying has, if anything, slightly increased and certainly not decreased.

So, taken together, our research does not support the argument that the permanently sick have less serious health conditions nowadays than they used to.

A key plank of the Government’s policies for people who are unable to work due to illness is to try to support them back to work wherever possible. Our research shows that achieving this aim, requires careful consideration of the types of jobs and working environments that might be suitable for people with chronic illnesses.

If we don’t create enough jobs that older people with chronic illness can sustain and thrive in, life expectancy gaps between those in work and those who leave the workforce prematurely due to ill-health may widen further.

Work, permanent sickness and mortality risk: a prospective cohort study of England and Wales, 1971-2006 is research by Bola Akinwale, Kevin Lynch, Richard Wiggins, Seeromanie Harding, Mel Bartley and David Blane. It made use of linked census and death records in the ONS Longitudinal Study.

Photo credit: ILO in Asia and the Pacific