Retirees could be talked out of leaving jobs under Government plans to keep people in work longer

People nearing retirement age will be talked out of leaving their jobs under government plans to keep employees in the workforce for longer.

Pension providers could be required by law to proactively reach out to older workers to discuss their future plans and encourage them to consider whether they can afford to retire.

The stronger measures are being considered as part of a means of plugging gaps in the workforce by slowing down the sharp rise in the numbers of over-fifties who are stopping work.

They could be implemented alongside proposals to expand existing jobcentre-style services offering careers advice to those later on in their working life.

Work and Pensions Secretary Mel Stride is understood to be considering the new policies as part of a package to reduce rising economic inactivity, which is adding to workforce shortages in the UK.

The Government’s current “Mid-life MOT” sees workers in their 40s and 50s encouraged to review their finances, skills and health to better prepare for retirement.

Jobcentres currently work with older people seeking employment to offer them advice and support.

But Government insiders believe strengthening these measures to make pension providers legally obliged to proactively reach out to customers will prevent the workforce from haemorrhaging talent.

Ministers are considering whether, with personalised support, people can be encouraged to remain partially working by being coached into a different career path – or taking part in community work.

Many older workers who have left the workforce – but who said they would consider working again – cited flexible working as one of the primary factors that would incentivise them to take up work.

And Government sources said that ensuring employers offer support to allow staff to adapt their job requirements may stop the flow of people from leaving the labour market altogether.

Mr Stride is expected to unveil a package of proposals in the new year designed to tackle the growing problem of economic inactivity that has soared since the Covid-19 pandemic. The policies will then feed into Chancellor Jeremy Hunt’s Spring Budget.

More than 20 per cent of 16 to 64-year-olds are classed as economically inactive – not working and not looking for work – despite there being almost 1.2 million vacancies as of November 2022.

Adults aged over 50 have been driving an increase in inactivity since the Covid-19 pandemic, according to the Office for National Statistics (ONS).

In May to July 2022 there were 386,096 more economically inactive adults aged 50 to 64 years than before the pandemic.

Delayed healthcare, caused by the pandemic, is thought to be a considerable factor – with one in five out of the workforce saying they were currently on a waiting list for NHS treatment.

But ONS data also revealed that among those who would consider returning to work, the most important factors when choosing a job was flexible working.