Here’s a surprising truth: while many young people are stepping back from the workforce, Britain’s pensioners are diving in headfirst. But why are they refusing to retire, and what does this mean for the rest of us? Let’s dig into this fascinating—and somewhat controversial—trend.
Take Danielle Barbereau, for example. At 67, she’s watched her husband embrace retirement with open arms, spending his days on DIY projects and leisurely walks in Northumberland. But Danielle? She’s not ready to hang up her hat. After a brief stint of unemployment in her 50s reignited her passion for work, she transitioned from academia to becoming a self-employed divorce coach. For her, work isn’t just a job—it’s her raison d’être. And she’s not alone.
And this is the part most people miss: In the 2024-25 tax year, a staggering 2.12 million people aged 66 and older were still working, despite being past the state pension age. Meanwhile, the number of young adults (16-24) who are not in education, employment, or training (NEETs) hit an 11-year high of 987,000 early last year. That’s roughly one in eight young adults—a statistic that raises questions about the future of the workforce.
But here’s where it gets controversial: while pensioners like Danielle are staying active in the workforce, they’re also benefiting from a tax anomaly. Once you reach state pension age, you stop paying National Insurance (NI) on your wages—though you still pay income tax. This quirk in the system has cost the Treasury £1.1 billion, according to former pensions minister Steve Webb. Is this fair? Or is it time to rethink how we tax older workers?
Consider this: a graduate in their late twenties earning £30,000 a year faces a marginal tax rate of 37% when you factor in income tax, NI, and student loan repayments. A worker in their late sixties earning the same amount? Just 20%. And don’t forget, they’ll also receive a £12,547 annual state pension. Does this system favor pensioners at the expense of younger generations?
Toby Whelton from the Intergenerational Foundation argues that this imbalance is fueling ‘sheer despair’ among young workers. ‘They feel forgotten,’ he says. ‘Property wealth is out of reach, and work no longer guarantees the milestones their parents achieved.’ Meanwhile, Dennis Reed from Silver Voices points out that not all pensioners are working by choice. Many are forced to continue working because the state pension simply isn’t enough to cover their needs.
But here’s the bigger question: Should we close the NI loophole for pensioners? Some argue it would level the playing field, while others warn it could push older workers out of the workforce, reducing income tax receipts. Andrea Barry from the Centre for Ageing Better cautions, ‘We need to fully understand the impact before making hasty changes.’
For Danielle, the idea of paying NI on her freelance income is a non-starter. ‘I’ve contributed to the system for decades,’ she says. ‘Why should I keep paying now?’
So, what do you think? Is the current system fair, or is it time for a change? Let’s hear your thoughts in the comments—this is one debate that’s far from over.
