Over 70s fastest-growing group of freelancers
New research has revealed that people in their 70s and 80s shifted into self-employment to become freelancers faster than any other age group in the UK over the past two years, which brings to light a whole host of questions about how people are now spending their golden years and why.
- The number of self-employed people reached a high of 4.95 million people in July to September 2019, falling to 4.27 million in July to September 2021 – a drop of 682,000 or 14%. But many that did enter enter self-employment were nearing or at retirement age.
- In July-September 2021, 508,000 economically inactive 50-64 year olds still said they wanted a job.
According to new research, the number of self-employed workers fell across all age categories in the past two years apart from those in their 70s and 80s which increased by 7% and 88% respectively, smashing preconceptions that 20 and 30-somethings represent the bulk of freelancers and self-starters in the UK.
The research carried out by Rest Less, an online community and advocate for people aged 50-plus, found that the number of self-employed people reached a high of 4.95 million people from July to September 2019, falling to 4.27 million from July to September 2021 – a drop of 682,000 or 14%. The number of self-employed individuals has not been this low in any July – September period since 2013.
What happened to all those self-employed workers in 2021?
The drop in the number of self-employed people in the UK was a side-effect of the pandemic and the simultaneously sweeping and confusing changes to legislation regarding off-payroll working rules (IR35) which came into force in April 2021.
According to the report, these factors resulted in many contractors who previously classed themselves as self-employed moving onto company payrolls, which has contributed to the fall in self-employed numbers and boosted the numbers on payroll.
Despite the drop in the number of self-employed workers in their 50s and 60s, the proportion of self-employed people aged 50 and older increased in the past two years from 45% to 47%. There are more self-employed workers in the 50-59 age group than in any other age group. This is now the only age group where the number of self-employed workers exceeds 1 million.
What’s driving people nearing retirement age into self-employment?
Max Wallace started his community fitness company, Health Defence, in 2020 out of survival. According to Max, he had unlawfully been terminated from employment after sixteen years of loyal service — and seeing the need for an affordable fitness programme for the community, filled that gap and started one. To learn more about his life and business journey read here.
He said, thanks to the support of Hammersmith & Fulham Council, he has been offered a unique location to deliver his training — a railway arch.
Max’s story is a familiar one for people aged 50 and over who were let go or made redundant during the pandemic. This age group is more at risk of long-term unemployment than younger people, according to a report by the Office For National Statistics (ONS).
Yet Stuart Lewis, Founder of Rest Less, also sees other factors contributing to greater self-employment numbers in people nearing retirement.
“Whilst the number of self-employed workers overall has shrunk by 14% in two years, self-employment remains an attractive option for many workers in their 50s, 60s and beyond, with workers over 50 making up nearly half of the entire self-employed population,” says Lewis.
He continued: “From our community we see three main drivers behind the popularity of self-employment amongst experienced workers. The first is around the surge in mid-life entrepreneurship and armed with significant business and life experience, the opportunity to head out on their own and build something that excites them is a real draw.”
Some are attracted by the flexibility that self-employment can offer, as a way of balancing work and home ambitions and restoring a sense of work-life balance after decades of hard work. For others, however, it can feel like the only option to earn a living for anyone feeling shut out of the workforce due to age discrimination.”
Why state pension age should not go up
Analysis of population projections by consultants LCP has found that the government’s current plans to raise state pension age to 67 by 2028 and age 68 by 2039 have been ‘blown out of the water’ because expected improvements in life expectancy have largely failed to materialise.
If the government sticks to its policy of linking state pension age to life expectancy (as projected by the Office for National Statistics), there would now be no case for raising the pension age from 66 to 67 until 2051 – twenty-three years later than currently planned. This change alone would deprive the Treasury of at least £195 billion in planned savings on state pension expenditure but could give a state pension age ‘reprieve’ to more than twenty million people born in the 1960s, 1970s and early 1980s, says LCP.
LCP has taken these latest projections and re-run the Government Actuary’s calculations to see what they imply for state pension age. The dramatic conclusions are:
Any move from 67 to 68 would not be needed until the mid-2060s, rather than the mid-2040s as per current legislation, and certainly not by the late 2030s as planned by the government;
The move from 66 to 67, which is currently scheduled to be phased in over a two year period between 2026 and 2028, could be put back twenty-three years to 2049-51.
LCP stated that if ONS conclude that the Pandemic could have a lasting negative impact on life expectancy, this could imply even further delay in state pension age increases and could intensify the political pressure to ditch the forthcoming move to age 67.
“The Government’s plans for rapid increases in state pension age have been blown out of the water by this new analysis. Even before the Pandemic hit, the improvements in life expectancy which we had seen over the last century had almost ground to a halt. But the schedule for state pension age increases has not caught up with this new world. This analysis shows that current plans to increase the state pension age to 67 by 2028 need to be revisited as a matter of urgency. Pension ages for men and women reached 66 only last year, and there is now no case for yet another increase so soon”.Steve Webb, partner at LCP