Why making women retire later comes with hidden cost

State picks up £5,600 bill for the caring of elderly relatives they would’ve taken on

REFORMS that pushed back the age women can claim the state pension at have not saved the taxpayer money, a study has found.

Women who continue working in their sixties compensate by reducing the care they provide for their parents, it said.

for every woman working 30 hours a week in her sixties, it costs £5,600 to make up for the care she would otherwise have provided for older relatives, researchers said in the report published yesterday.

It points to a serious downside to pension reforms that swept away women’s retirement age of 60 and pushed back the point at which women can claim the state pension by six years or more.

Academics led by Ludovico Carrino of King’s College London said: ‘Women in the UK who work more hours due to the increase in their state pension age substantially reduce informal caregiving to older parents, who receive less overall care as a consequence.’ The paper, presented to a conference of the Royal Economic Society, undermines ministers’ and civil servants’ assumption that later retirement benefits the country.

The study was based on more than 7,000 women aged 55 to 65 who were tracked from 2009 to 2018 in the Understanding Society project. Many continued working in their sixties which researchers said had a major impact on the £130billion-plus yearly value of care for the elderly given free largely by middle-aged daughters. The chance that a woman would give more than 20 hours a week of care to her older relatives dropped by half if she worked after the age of 60, the study found, and a woman working 30 hours a week would reduce the care given to her parents by 330 hours a year.

That makes the cost to taxpayers of replacing the hours of care lost for each working middle-aged woman £5,600 a year, a figure calculated from a standard pay rate for carers of £17 an hour.

The study did not account for the income for the nation generated by women working in their sixties who would have been paying much less in income tax had they retired. The report said: ‘Parents who receive less help from their daughter do not receive more help from other family members or formal services as a counterbalance. Therefore, support for older parents shrinks when their daughters work longer due to postponed state pension age.’

Researchers said reforms could include more free care for old people whose family carers have jobs, or subsidies for employers to allow flexible hours for older workers who have caring responsibilities.