Early retirees may be forced back to work due to costs crisis, MSPs warned

Workers who had taken early retirement may be forced back into the labour market due to cost-of-living concerns, a Holyrood committee has heard.

Experts have highlighted fears over the number of people who may be facing poverty because they left or lost their job through the coronavirus pandemic.

Jack Jones, a policy officer for the Trades Union Congress said some of those who left their job early cannot afford to live off their pension fund.

Others have said their retirement choices have changed since the pandemic, with many opting to work beyond the retirement age.

Speaking to the Scottish Parliament’s Covid-19 Recovery Committee, Mr Jones said more effort is needed to help over-50s re-enter employment.

He said: “I think it is likely that we will see people looking to unretire in larger numbers than we’ve seen previously.

“Generally, few people do come back into the workforce after they’ve retired and I think one of the reasons for that is it is really difficult if you’re looking for work in your 50s and 60s.

“We need to look at how do we remove some of the barriers that older people face getting back into work, particularly when they have been out of work for a period.

“Whenever we’ve seen surveys of people being asked about how Covid has affected their retirement plans, quite a lot of people do say that their plans have changed as a result of the last couple of years.

“But it is mostly people saying that they are likely to delay retirement rather than bringing retirement forward.”

Data from the Office for National Statistics revealed a quarter of 23,490 workers had left paid employment since the start of the pandemic, according to an August survey.

However, 38% of those aged 50 to 54 said they were confident or very confident that their retirement provision would meet their needs, compared to 55% in the 60-65 age group.

Mr Jones said the figures are a “cause for alarm”.

He said: “This idea that people are making a choice to retire early is clearly a factor for some individuals, but I think it is generally overstated a little bit.”

He told MSPs there is an “alarming situation” for those who cashed out their pension fund early to live off until they reach state pension age.

He said: “On this idea that people are cashing in quite small defined contribution (DC) pension pots and using that to tide them over until they reach state pension age – there does seem to be evidence that’s happening – but that’s not a good outcome.

“That’s kind of an alarming situation when you think of how low our state pension is. If people are cashing in DC pots to tide them over for two years and then intending to rely solely on the state pension, I think that’s going to cause issue for people reaching state pension age.”