The great unretirement: Pensioners return to work as cost crunch bites

Grandmother Janet Kane has no choice but to get up and go to work two days a week.

Soaring bills mean that the 68-year-old is forced to keep her job as a receptionist to make ends meet.

Janet, from Gosport in Hampshire, is one of the record number of people continuing to work into later life — or boomeranging back into jobs after retiring. And she is exhausted.

Back to work? The state pension, currently £9,627 a year, will be swallowed up by rising energy bills alone, which are forecast to exceed £4,000 over winter

‘If I had the energy, I’d work more,’ she says. ‘I really don’t know whether it’s going to be enough. I’m going to have to tighten my belt.’

Pensioners are expected to bear the heaviest brunt of the soaring cost of living. The state pension, currently £9,627 a year, will be swallowed up by rising energy bills, which are forecast to exceed £4,000 over winter, unless the Government steps in.

And with inflation set to top 13 per cent in October, all other costs are shooting up too. Already, the number of over-65s being referred to food banks has doubled in the past 12 months, according to figures from the Citizens Advice Bureau.

It is little wonder then that so many feel they must carry on working into old age.

Figures from the Office for National Statistics (ONS) show a record 173,000 pensioners entered employment in the three months to June.

Similarly, a survey by Rest Less, an online community for the over-50s, says a third of pensioners are considering going back to work.

It signals quite the U-turn after hundreds of thousands of people in their 50s and 60s left the workplace during the pandemic.

Lockdown forced many of them to reassess their priorities and give up demanding hours or long commutes. Yet now a number are discovering they do not have the funds to get through the winter.

But is it all bad news? Dame Sharon White, chairman of John Lewis and Waitrose, last month urged the Government to encourage more over-50s to go back to work. Widespread labour shortages, she says, mean older people are a welcome addition to the workplace.

And Money Mail has spoken to some members of the silver workforce who say they are happy to keep playing their part.

Here, we debunk what is driving ‘The Great Un-retirement’.

‘Thinking of a change later on in life? Do it!’ 

Hats off: Tricia Hamilton is following her childhood passion

Tricia Hamilton, 68, was working as a primary school teacher in Hong Kong before she decided to change course and become a hat historian.

The mother-of-two, from Weybridge, Surrey, says: ‘I was living abroad but came back to England with the thought to retire. I’ve loved hats since I was little and after my daughter couldn’t find a fascinator for a wedding I decided to make her one.

‘Then several friends commissioned me to make bridal pieces and they were so pleased with them that I decided to start a business.’

After leaving teaching ten years ago she undertook apprenticeships with other craftspeople and began working for The Hat Channel, a magazine for people who love headgear.

Despite leaving her previous job so close to retirement, Tricia has no regrets.

‘To anyone thinking of changing career later on in life I would say do it, for sure,’ she says.

Why the return to work?

While bills are climbing, the state pension has remained stagnant. The annual payout rose by 3.1 per cent in the spring — well below the current rate of inflation.

If Janet Kane had decided not to continue working, she would be surviving on £185.15 a week — alongside a further £93 a month from a small private pension.

She is also one of millions of women hit by the Government’s decision to hike the female state pension age to 66.

The change, which was phased in over ten years for women born between 1950 and 1955, means that she had to wait much longer than anticipated to start receiving the payment.

She says: ‘Even with what I’m earning at the moment, it leaves me with around £400 a month for food and any extra costs. There’s not a lot left to do anything with.’

However, rising prices are not the only thing driving people back to work. Increasing numbers of companies are actively seeking to hire older workers to plug the gap in labour shortages.

The number of job vacancies slipped slightly from 1.295 million in June to 1.274 million in July, but still remain close to record highs.

Nearly a quarter of John Lewis’s workforce is now aged over 56. The company allows its employees to work reduced hours around caring responsibilities.

A John Lewis spokesman says: ‘In a tight labour market, employers need to work with the Government to support people of all ages and backgrounds into work.’

Fast food giant McDonald’s has also launched a recruitment campaign targeting older workers. It features an employee at the chain who took the job after deciding he ‘isn’t the retiring type’.

Julie Taylor, 55, wants to keep working as long as possible at the franchise because of the flexibility it affords her.

The former nurse, from Canterbury, has worked as a customer experience leader since 2019. During the pandemic, she became a carer for an elderly couple she met in the restaurant and was able to fit in helping them around work.

She says: ‘Older workers often have other responsibilities. Whether it’s for children or grandchildren or for elderly parents, making sure that people can fit these responsibilities around their job is really important.

‘I’ve seen quite a few people working in other McDonald’s well into their 70s and 80s, so I’m still relatively young really!’

54 years of experience is priceless 

Grandmother-of-four Pat Chapman-Butcher thinks that employers should be looking at older workers as a resource

Pat Chapman-Butcher, 75, wants to ‘lend a hand’ while she still can.

The grandmother-of-four, from Oxford, works full-time as a consultant and mentor for business consultancy Defy Expectations.

Pat thinks that employers should be looking at older workers as a resource, rather than overlooking them.

She says: ‘For me, it’s about taking the experience which I’ve gained over the years and using that to help people.

‘There are a lot of people in very senior positions who have never managed through a recession or inflation. But in a 54-year career I’ve done all those things.’

Pat’s 80-year-old husband Jeremy Barrow is also still working as an antiquarian clock restorer.

She adds: ‘Even if people want to retire from the job they’re doing now, they don’t necessarily want to retire from the workplace. We need to find roles for them.’

Do employers value over-50s?

Companies are beginning to offer new perks to help retain workers after they have reached retirement age.

Travel and insurance firm Saga, for example, launched its Grandparents’ Leave policy last year, which gives employees a week of paid leave to celebrate the birth of a grandchild.

And savings and retirement firm Phoenix Group announced a partnership with Rest Less earlier this year. To date, it has posted more than 100 job adverts.

Chief executive Andy Briggs, says: ‘We also know that many women leave the workforce during the menopause, which is why we run an ongoing menopause awareness campaign to ensure our colleagues are understood and well supported.’

Elsewhere, video messaging mobile phone app Frog is looking for a ‘senior intern’ to ‘provide relevant coaching, training and support’ during a two-week internship at the company’s headquarters in London.

The Government is considering extending temporary changes to the NHS pension scheme in order to make it easier for retired staff to return. 

Since March 2020, retirees have been able to go back to work without pension benefits being affected. 

The lifetime pension cap has previously meant thousands chose to leave the workforce early to avoid being taxed at retirement.

However, experts say that companies need to do more to entice the over-50s back.

According to ONS research from March, 69 pc of retirees who are considering returning to work would like to do so on a part-time basis.

Victoria Tomlinson, chief executive of Next-Up, which provides workshops for employees pre-retirement, says: ‘People want to do something with their time and they want to feel valued — but they do want to change pace.

‘Instead of letting people retire, employers should have conversations with people about what they might want to do and how they could stay with their employer in a new way.

‘You’re letting all that experience go out the door and then you’re spending a fortune trying to pull people back in. We need much more imagination at the top.’

Now I can focus on me again 

Goals: Alexandra Tattersall is is keen to complete her advanced level nursing

Nurse Alexandra Tattersall is happy to keep working.

The 57-year-old, from Blackpool, says: ‘When I started out in nursing 24 years ago there were staff shortages. Since then, staffing has just continued to decline.

‘A lot of us who are reaching retirement age are still fit and healthy. I can still do the things I could do 20 or 30 years ago. No one would look at me and ask if I was going to retire.’

A mother-of-six, Alexandra is keen to complete her advanced level nursing practice, a two-year qualification which is equivalent to a master’s degree.

She adds: ‘I’m at a time in my life where I don’t have the same responsibilities with having children and I can focus on me.

‘I want to achieve something that I am proud of.

‘As long as I continue to be challenged, I will keep working.’

Can un-retiring hurt my pension?

Returning to work after a career break may have unexpected consequences for your pension.

If you have already started drawing money from your pot and want to continue to do so while working, you may lose more of your pension to income tax.

Pension income is treated the same as any other income, so you pay tax on earnings over the £12,570 personal allowance threshold.

And once you’ve started to access a pot worth over £10,000, this also means the Money Purchase Annual Allowance (MPAA) kicks in.

Before you’ve started to draw your pension, the annual allowance lets you pay £40,000 into your pot each year while still getting tax relief.

Once you tap into your pension, the allowance is reduced by 90 per cent. This means any defined-contribution pension, where you have built up a pot of money, can only be topped up by up to £4,000 a year.

If you continue working past the state pension age, you are not required to pay national insurance.

But from April, those working over pension age will be liable to pay the health and social care levy — a 1.25 per cent tax on earnings. New Prime Minister Liz Truss, however, has pledged to scrap this tax hike.

If you do not immediately need the extra income, it may be worth considering deferring your state pension, or stopping receiving it if you have already started.

If you reached state pension age before April 6, 2016, then putting off claiming the payment for a year will increase the full basic state pension by £14.75 a week to £156.60.

If you become eligible after this date, your state pension will increase every week you defer, as long as you defer for at least nine weeks.

This means, for example, if you defer the full £185.15 new state pension for 52 weeks, you’ll get an extra £10.70 a week on top.

Former pensions minister Sir Steve Webb says that it is important to think through how returning to the workplace affects your pension position.

He says: ‘If you go back to work for your previous employer, you need to check if there are rules about drawing a pension whilst still working for them. And you need to be careful about much lower limits on pension contributions for those who have once flexibly accessed their pension.’

Sir Steve, who is now a partner at pensions consultancy Lane Clark and Peacock, adds: ‘It is also worth looking into suspending your state pension while you are back at work, as this can mean a higher rate of payment when you fully retire.’

Funeral inspired whole new career 

Amanda Wheal, 59, left teaching after 34 years to start a new career as a celebrant who specialises in weddings.

The former secondary school teacher, from Leigh-on-Sea, Essex, says: ‘I was getting a bit disenchanted with teaching and was thinking about retiring when my brother died unexpectedly.

‘I was very involved in the funeral and we had an incredible celebrant. I just thought that was something I’d really like to do.’ 

Award winner: Amanda Wheal has started a new career as a celebrant

After completing her training while continuing to work as a teacher, Amanda established her business in 2020 and has now won awards for her work.

‘I didn’t plan to retire as early as I did but, once I had completed my training, I was so keen to get started that I just went for it,’ she says.

‘I’ve had the most wonderful two years, it’s just been incredible.’

Will my benefits be affected?

Benefits such as free prescriptions, eye tests and free over-60s bus passes will not be affected if you return to work.

However, if you are currently claiming payment-based benefits or tax relief — such as help with council tax, pension credit or disability and care benefits — then these may be affected.

To check whether your entitlement might change, speak to a financial adviser or visit gov.uk/ benefits-calculators.

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