The story of Britain's changing workforce is a fascinating one, with a surprising twist. While young adults are increasingly shying away from the workplace, the nation's pensioners are embracing it with open arms.
Meet Danielle Barbereau, a 67-year-old divorce coach who has no plans to retire. Her journey began with a brief stint of unemployment in her 50s, which reignited her passion for work and led her to a new career path. She's not alone; according to HM Revenue & Customs, 2.12 million people aged 66 and older were still working during the 2024-25 tax year, despite being past the state pension age.
But here's where it gets controversial: the number of young adults aged 16 to 24 who are not in education, employment, or training (Neets) hit an 11-year high of 987,000 early last year. This means that about one in eight young adults is a Neet, with long-term mental health issues being one of the reasons cited for this trend.
In contrast, 1.56 million workers who had passed the state pension age were still on company payrolls in 2024-25, a 12% increase from the 2020-21 tax year. Additionally, 562,000, including Barbereau, continue to work for themselves, an 8% rise from five years ago. An interesting statistic shows that there are now more people over 70 paying income tax than under-30s, with 5.45 million over-70s paying income tax compared to 5.23 million under-30s.
Barbereau's decision to keep working is a choice, not a necessity. She and her husband are mortgage-free and have their own private pensions. She finds purpose and meaning in her work, stating, "My job is my raison d'etre."
However, not all working pensioners are as fortunate. Dennis Reed from Silver Voices, a group advocating for the over-60s, highlights that many are forced to work due to the insufficiency of the state pension to meet their daily needs. He suggests that those with generous private pensions may continue working to combat loneliness and socialize with colleagues.
The growing pensioner workforce has a significant impact on the nation's finances. An anomaly in the tax system means that pensioners stop paying national insurance on wages once they reach state pension age, resulting in a loss for the Treasury. National insurance is levied at 8% on earnings between £12,570 and £50,270 and 2% on income above this threshold. The exemption for pensioners exists because historically, most people retired once they could claim the state pension.
In 2000, only 467,000 workers were aged 65 and above, but the national insurance exemption cost the Treasury about £1.1 billion last year. This has led to a debate about the fairness of the tax system, with some arguing that it drives "sheer despair and a lack of hope" among young workers who feel forgotten and unable to achieve the same milestones as their parents.
Toby Whelton from the Intergenerational Foundation believes the tax system needs to be fairer and that the national insurance anomaly should be addressed. Before last year's budget, Chancellor Rachel Reeves considered plans to increase income tax by 2p while lowering national insurance by 2p, which would have impacted working pensioners more.
Some analysts argue that removing the exemption could drive older people out of the workforce, reducing income tax receipts. The over-70s paid £19.1 billion in income tax in 2022-23, much of which was on pension income. Andrea Barry from the Centre for Ageing Better suggests that more research is needed to understand the impact of ending the exemption before any hasty decisions are made.
For Barbereau, the idea of paying national insurance on her freelance income is not appealing. She has been contributing to the system since she was 18 and wonders why she should continue paying now.
This story raises important questions about the changing dynamics of the British workforce, the role of pensions, and the fairness of the tax system. What are your thoughts on this issue? Do you agree that the tax system needs an overhaul to address these disparities? Share your opinions in the comments below!
