20
Examination of witnesses
Carl Quilliam and Yvonne Sonsino.
Q117 The Chair: Welcome to the House of Lords Economic Affairs Committee’s latest evidence session for our inquiry on preparing for an ageing society. We are delighted to welcome two witnesses today. The first witness is Carl Quilliam, public affairs manager at the Chartered Institute of Personnel and Development. Welcome, Carl, and thank you for your time. Joining us remotely, we have Yvonne Sonsino, partner and lead on total well-being and longevity at Mercer. Yvonne, thank you very much for your time. This session is being broadcast on Parliamentlive.tv. We will take a full transcript and share it with you shortly afterwards so that you can make any necessary corrections.
I start by asking you both this question. To what extent are the issues raised by an ageing workforce adequately grasped by business in the UK? Do you think businesses are aware of the opportunities, as well as the issues, that arise as a society ages and further work is pursued on how to adjust? Yvonne, would you like to start on that?
Yvonne Sonsino: The understanding is much better than it was. I have been practising in this area for about 10 years now. It is fair to say that, 10 years ago, people were interested in demographic change but not ready to take any action. We see a marked difference now in our clients and their response.
To put some data to that, we run a C-Suite Outlook survey. For 2025, longevity implications and the issues around demographic change were cited as a top three business risk to growth globally. For Europe, including the UK, that was cited at 27%. Globally, 25% of C-Suite executives voted it as a top three risk to growth.
We think it is changing. We are now seeing a lot more active engagement in this issue, looking at understanding the demographic profile in countries and organisations. We have worked very closely with the World Economic Forum to highlight these issues for businesses and highlight the pathways to help in these areas. The recommendations fall into a range of areas which are broadly health and well-being, wealth and financing, and the career and skills implications of that. Much more advocacy work is still needed to engage an active movement by employers, as ageism still runs high. I will pause there.
Carl Quilliam: I can see we might have some competing statistics as we go through this. From our perspective, we see a similar trend, but the overall picture is not quite as clear cut. Obviously, this demographic change has been coming for a long time. It is a big issue economically and politically. In theory, it should have widespread awareness among employers, and that awareness is clearly growing.
If we think about millennials—the biggest cohort now in the workplace—the first cohort are going to be entering their 50s in five years’ time. For a lot of people in work, this is going to become more and more of a personal issue as well.
The widespread awareness of how it works in practice and what it looks like for business is a different picture. The good news from a CIPD perspective is that our labour market outlook from autumn last year shows that almost 60% of employers have hired someone who is aged 50 to 64 in the last three years. We also know, from our research in 2022, that roughly only 18% of employers collect data on their workforce’s age demographics at all.
Our research suggests that only a minority of employers recognises the ageing workforce as a strategic challenge facing their business. Less than half of employers engage in strategic workforce planning that would, for example, involve them analysing their workforce skills, capabilities and make-up to understand future skills gaps.
According to our resourcing and talent planning survey, just 18% of employers are planning over two years into the future. A lot of employers plan only up to 12 months ahead, and that is often more prevalent for SMEs and the long tail of smaller businesses.
There is a long way to go. As Yvonne says, there is certainly progress, but there is still more we need to do for employers looking at the age profile to become common practice.
I will pause in a moment; I appreciate I am taking more time than Yvonne did. The one thing I would say is that employers are becoming much more likely to be focused on dealing with the practical issues they face, which are often exacerbated by an ageing workforce—in particular, the health and well-being of staff. Our recent health and well-being survey showed that an increasing proportion of employers now have a health and well-being strategy, which will pick up a lot of the issues we are talking about when we talk about older workers. We are also seeing more employers provide support around menopause transition, caring for ill relatives and bereavement, which is another issue for this age cohort. I will pause there and let you come back in.
The Chair: Can I ask each of you a quick follow-up on this? In your view, from a business perspective, how well do you think government is grappling with these problems?
Yvonne Sonsino: We see some support. My role involves multinational work; we are working with Governments all over the world on this. Across every region—Latin America, Europe, the Middle East and the Far East—we are seeing support and changes evolve in country. In some cases, for example, countries are mandating that a certain percentage of older workers must be in place. Governments are reacting to increasing retirement ages to help fund pensions and their financing implications. I would say there is some support, but they are busy agendas.
Some of the best results we have seen are things that work at a practical level. Like Carl said, people like to work more flexibly as they start to age. The more flexibility we can mandate or build into jobs—around working hours, working remotely, part-time, job share, condensed hours and phased retirement—the better. They are the ones that get the highest take-up and are deemed the highest value in our work and research with employees over 55-ish. Things such as health screenings are also becoming very much valued by that population, and we have good health screenings in place in the UK, but there is there is always more that we can do.
The Chair: Carl, what is your view, particularly about the UK Government’s response?
Carl Quilliam: From our perspective, particularly of the groupings that the Government have looked to engage with, there was a bit of churn in the policy vehicles in the lead up to the election, but things have shifted markedly in terms of the lens that the Government put on some of these issues.
By and large, a lot of the issues affecting older people are issues for the workforce more generally. Having a broad lens is not necessarily an issue. Take, for example, the 50Plus Choices Employer Taskforce, which was run by the Department for Work and Pensions. It had a really good report which we fed some recommendations into last year. That has now dissolved and been parked. We know that the Department for Work and Pensions is still looking at occupational health, for example, but the group which was set up to look at that last year ran into the election and did not continue its work.
A big piece is the Flexible Working Taskforce, which did quite a lot of work to feed into the legislation last year. As has been touched on, flexible working is potentially quite big in this area. It is not just about all the workers but broader areas of policy. That has now been dissolved.
We think there is an opportunity for the Government. As I said, the Government are not doing nothing now, but things have shifted. There is the Keep Britain Working review, for example, which is looking at health issues in the workplace and will pick up some of this. There is also the menopause advisory group, which will pick up some of this as well. It is about how that all comes together. The churn we have seen speaks to that.
There is a real opportunity for a workforce strategy, led by a workforce commission, to bring all these things together, particularly when there is a big piece of employment legislation going through Parliament looking at, for example, changes to employment costs, the skills piece—which we have not talked about yet—and how you can bring all that together and feed into what the Government are trying to do in the broader industrial strategy. There is an opportunity there—which, at the moment, is potentially being missed—to look at these issues in the round.
Q118 Lord Verjee: The question I have been allocated is quite similar. It seems to me that we have been hearing about issues from a government point of view, or from an employer’s point of view. What are the main challenges facing the 50-plus age cohort when it comes to employment opportunities from an employee perspective? What helps people thrive in the workplace after the age of 50? Are there any programmes or initiatives by specific companies or organisations in place that have been successful that we can look at as best practice? From the employee point of view, how can we encourage employees to prepare for working longer and to be skilled to do that?
Yvonne Sonsino: Thank you for the question. There are a number of challenges facing the 50-plus cohort. I was at a gathering in the House of Lords last Tuesday, run by Brave Starts, looking at recruitment as one of the big challenges, because getting back into the workplace for the over 50s is a really tough one.
We also see quite a lot of issues around training the older population, and access to training and reskilling at that age. There seems to be plenty of training in your younger years and as you develop through your early career, but in that later stage training seems to drop off the radar.
Health can be a major challenge for individuals. Many people globally are living with poor health conditions, and that is certainly true for the UK. We are living for around 10 years now in poor health. Our lifespan may be 80 years, but our health span is only 70, so health is a big challenge. Caring responsibilities can also be a challenge, and we may talk a little about that on a later question.
As for specific examples of companies putting into place policies and schemes that are successful, I mentioned earlier two of the top things that come through in our research as being most valued by employees. These are opportunities to work more flexibly—that may include phased or flexible retirement, where you move from full-time work into full-time retirement over a period of two or three years—and opportunities to attend age-related health screenings, and getting advice and information about those.
I will quickly run through a couple more stats. Our research shows that 50% of employers are currently offering some form of structured phased retirement programme, which is up from about 17% pre-pandemic. In those five years, we have seen real growth and interest, and therefore perceived success, in offering a phased or flexible retirement programme.
When we do our research, we look at companies that outperform their peer group and at the things they are doing differently that appeal to individuals. For example, building multigenerational teams works very well for employees, who have lots to learn from each other, as does having the tools and knowledge that they need to retire.
Our work with the World Economic Forum shows that, in the UK, people outlive their pension savings by about 8 and half years, so their money runs out 8 and a half years before they die. Being able to access financial education can really help support employees to understand how long they need to work, how much they need to save, and how they can supplement that pension income in this flexible retirement period. Those are some things that we see as successful, as far as employees are concerned.
Carl Quilliam: We will break out in quite a lot of agreement on this, Yvonne. I will try not to double up too much on what you have already said.
Research suggests that there is often still bias against older workers, and that can look different ways in different places. To make the case on the other side, older workers are often more likely to have periods of long-term sickness than younger workers, but they are less likely to have short-term sickness. In a business context, short-term sickness can be more disruptive because it is more difficult to find a replacement worker. Turnover rates are often lower among older workers than younger workers, and they often have a wider diversity of experience.
The stats that we got from our report back in 2022 show that, often, the 50-plus cohort is much more positive about their jobs. They have a lot more enthusiasm for their work compared to their younger colleagues.
I will not dwell too much on the flexible working point, except to say that it is one to watch. It is clearly an area that supports all the workers staying in the workforce. The Government are bringing in some reforms at the moment, strengthening access to flexible work.
On the flip side, there are 300,000 over-50s on zero-hour contracts at the moment, so making that more complex for employers to use is another one to watch. Are those employees in that age cohort doing so because they are downshifting? It will be interesting to see what happens if there is a change in how they can access that work.
There is only thing I would add to what Yvonne said about health issues. We can think about all the workers and the health issues that they have now, but we also need to start thinking more upstream about people in their 20s, 30s and 40s. As I said, the oldest cohort of millennials is going to be in their 50s soon. There is a pipeline of workers coming through, and we know some of the big health issues that are affecting those groups—musculoskeletal issues is a big one and stress is another. Thinking about the longer-term pipeline is important.
To pick out a good example from the case studies we have looked at—I will not go into lots of detail on this—B&Q has consistently highlighted the value of older workers. It offers the phased retirement that Yvonne was talking about, as well as more flexible contracts and hours. It has also developed a framework that offers people choice around how and when they learn—that is the skills piece, which is really important.
I will leave it there, but those are some of the issues in that space and what employees are looking at.
The Chair: The CIPD works with the Government on specific projects supporting older workers, is that right? Can you give us a couple of crunchy examples of the things you do? That would be helpful.
Carl Quilliam: The biggest thing we did most recently was on the 50Plus Choices Employer Taskforce under the last Government, which I talked about. As part of that, we produced a report, which went to the Employment Minister, with recommendations for employers and for the Government. I will touch on a few, but I can share it afterwards so people can get more of a gist of what we are doing.
The Chair: It would be useful if you shared it afterwards.
Carl Quilliam: More generally, we are feeding into the Keep Britain Working review, and bringing some evidence to that.
One thing we recommended to the Government was to provide a range of practical examples for use specifically with the over-50s, including case studies, to help illustrate how flexible working can be used to aid retention. There is also a piece about ensuring HR support and resources for people. There is a review of the skills and training offering both for Jobcentre Plus and the Department for Education, looking at apprenticeships and boot camps to ensure they can be undertaken on a flexible basis. Again, the Government are working in this space at the moment and we are trying to feed some of that through. I will leave it there and share the rest afterwards.
Lord Davies of Brixton: When something becomes a cliche, you have to look a bit further. B&Q always gets mentioned. I need five examples to be impressed—even two would be better than one. B&Q always gets mentioned; I have never heard anyone else being used as a good example of what is happening there. There may be other examples, I would not know, but I would be more impressed if there were five. My preference is five.
Yvonne Sonsino: The hospitality industry has taken this one quite well. Wetherspoons, for example, has an active programme to recruit and train older workers, because shifts can be very flexible there. There are other examples; I would need to refresh my memory on what some of the more progressive employers are doing. I believe that Steelite, in the Potteries is another example of a company that has been very active in similar programmes to B&Q and Wetherspoons. I am sure we can rustle up a couple more to get your five.
Lord Davies of Brixton: That will be good, thank you.
Carl Quilliam: Similarly, we have various reports with cases that we can share after the fact. One that springs to mind is Enterprise Rent-A-Car, which has done quite a lot in the flexible working space that I can share.
The Chair: A quick follow-up from Lord Turnbull.
Lord Turnbull: By definition, both of you are working with firms that are interested in flexible and new ways of working, but is that general? If you took the generality of the population, are we still stuck with an old model? If you ask people how many years they think they are going to have to work for how many years of retirement, would you get a more pessimistic outcome than from the people you are working with who are interested in change?
A lot of people still think that they need to work from about 20 to 60, which is 40 years of work, and that they will then get a pension for about 20 years. I suspect the reality now is that, on average, people are working a lot less than that and so the pensionable years, if things do not change, are going to be shorter. The ratio of working years to pension years is a lot less favourable than you would get from people who are prepared to be pioneers.
Yvonne Sonsino: It is indeed; it has flipped on its head. The average work span in the UK is around 27.4 years now, and life expectancy has significantly extended. The model has flipped on its head. You may have seen these new multi-stage models of life where there is a large period in the middle; it is not just education, work, then retirement at the top. There is a real mixture in that middle period of self-employment, part-time work, change of career, career breaks and periods for caring. That is the reality of the new model.
Lord Agnew of Oulton: Did you say that the average life of work was 27 years?
Yvonne Sonsino: The work span in the UK, according to the index I use from the International Longevity Centre, shows the work span is 31.1 years in the UK.
Lord Turnbull: That means the ratio must be getting close to 1:1.
Yvonne Sonsino: I will check that.
Baroness Wolf of Dulwich: What does the distribution look like? Does that take into account all the people who are off sick for the entirety of their adult life? I must say, it would be very helpful to get some more details on that.
The Chair: Yvonne, if you could find that source and send it to us, that would be great. Thank you very much.
Yvonne Sonsino: I will do—I am hoping that I got it right now.
The Chair: That is why we give you a transcript afterwards.
Yvonne Sonsino: I was looking at it this morning, but I was looking at it for 10 countries at a time. I hope I have got it right for the UK. I will check it while we are talking.
Baroness Liddell of Coatdyke: I am having difficulty with the statistical base in all this. A lot of it is motherhood and apple pie. Companies want to say that they treat their older people in a wonderful way. How robust are the statistics? How can you check them? How can you get an overall image about what each industrial sector is doing on its own?
Carl Quilliam: I will attempt to answer that. You are right, in the sense that there is not a clear killer stat that will give you the picture that you want. There are things around that you can use to start to paint the picture. What I would go back to is this: if the Government were looking at a broader workforce strategy then that would be the basis for being able to understand, sector by sector, the different issues that you are trying to solve, with older workers being one of those.
Lord Petitgas: I am going to react to what you said, and Yvonne mentioned it earlier. In my experience, having seen many corporates in my working life, I do not think any of these companies—perhaps B&Q is an exception—have policies around ageing. I understand there is some general interest in how people age, and people have figured out that people are ageing, but I do not think there is a policy, active system or framework to deal with people beyond 55. I think it is taken as it comes, though maybe that is not the case in the hospitality sector. The market is efficient, because it is probably in the interest of the employers to use people in that way. If you think about BAE or Rolls-Royce, or any of these companies, I do not think any of them have a particular framework to deal with this. That is the impression I get from you—you mentioned B&Q and Wetherspoons and nobody else, and that dovetails with my experience.
Yvonne Sonsino: I completely agree. I do not think any company I have worked with—I have worked with many, having been working for 43 years; I actually retire on Friday this week—has a good policy around ageing.
We are working more closely now to help build that strategy around demographics. It is difficult to just deal with old age in a workplace, because you have to look at all generations—you cannot favour one above another. It is a tricky subject to tackle, and it is huge. Where we are seeing traction with companies developing these effective ageing strategies, it is because it is now starting to bite and hit them where it hurts—and that is in labour shortages. In the UK, we will have a shortage of 1.65 million people over the next five years through demographic change and poor health. Companies are really starting to feel these labour shortages.
Carl Quilliam: I would add one thing to that, thinking about the long tail of SMEs. We have done three different pilot research projects looking at delivering HR support to small and micro businesses. In those pilots, not just in this area, we found that companies often just do not know what they do not know. If you are a consultancy or a small business with five or six people, and you have a gap for a seventh or eighth person, you are not necessarily thinking about all the barriers; you are trying to fill that one space. It goes back to workforce planning, and that is replicated across thousands of businesses across the country. There is a systems issue that these small businesses are not necessarily going to pick up on without some sort of direct support and hand-holding to show them what they are missing.
Lord Petitgas: Is it even legal to segment different groups of people by age in a company? I have never seen it done. I have seen cohorts by sex and race, but I have never seen it by age.
Baroness Wolf of Dulwich: We were told by somebody that B&Q had to row back because it was told that its policy was not allowed.
Lord Petitgas: I am not even sure the data is available.
Yvonne Sonsino: The same thing happened to Barclays a few years ago. I co-chaired the DWP Fuller Working Lives group, and Barclays had declared an older apprentices scheme called the Older Apprenticeship Scheme. That was legally challenged, and it renamed it Bolder Apprenticeship. Simply with the use of imaging and the way it recruited, it aimed it at a different demographic—but you could not use those words.
Q119 Baroness Wolf of Dulwich: I have two quite specific questions, so if the answer is that you do not know, please feel free to say so, because it is also useful to know that.
We have obviously heard quite a bit about the impact on older workers of care responsibilities which cut in, both for people who are even older and for grandchildren and younger family. First, what does the data tell us? Do we have data that tells us anything good about the prevalence of informal care arrangements in the UK and how prevalent they are in the workforce?
The second question is to do with the development of more formal policies for caregivers and for carer’s leave. Are we in a position to say anything about whether the impact of this is likely to be a positive economic benefit, or whether it may actually mean that companies become less willing to employ older workers or to extend their own flexibilities?
Yvonne Sonsino: There is quite a lot of data around informal carers and, depending on which report you read, it is one in five, one in six, or one in seven, but it is at high levels and on the increase.
Of the types of policies in place now that the UK has implemented a policy of one week’s unpaid carer’s leave, the best I have seen in companies is extending that to four weeks’ fully paid leave.
There is evidence about the economic benefits of offering that. In preparation for this, I was talking to Matthew about my own situation, if I might just share that with you very briefly. Last year, my mum got cancer and my son-in-Law got cancer. You sort of expect it for your 93-year-old mum, but not for your 36-year-old, healthy son-in-Law. They were both hospitalised and had many operations and radiotherapy. I took advantage of my company’s carer’s leave policy to help them out. Over a six-month period last year, I spent time looking after both families. That meant time off work, but it also preserved my sanity, because I could help my family in a distressed situation. I could keep my job and remain economically active. My mum got out of hospital quicker—she recovered quicker because she got support at home. My son-in-Law, I am pleased to say, also got back to work quite quickly, with some extra support for him and his family that came from me as an unpaid carer.
There are significant benefits in offering more formalised carer’s leave, because it is often required at a point in time. You are not permanently on carer’s leave; it happens for a finite period of time. Employers, families and the public systems can benefit from improved situations there.
Carl Quilliam: I wonder if it is beneficial to revisit the figures slightly. From the latest census data there are around 5.8 million people who are providing unpaid care in the UK. Of those, nearly 3 million were recorded as balancing caring responsibilities with work.
CIPD research shows that, while the majority of working carers said their employer was aware of their caring responsibilities, this was mainly in an informal capacity—for example, as a result of conversations with line managers or colleagues. HR was rarely informed—13%. Of those, 28%—three in 10—of employees who are carers had not discussed their caring role with anyone in their organisation. There is potentially a very large group of people who are doing it informally and not discussing it with their employer at all.
On the carer’s leave piece and where we go next, we were really pleased to see the introduction of the unpaid carer’s leave. There is certainly a case for paid carer’s leave. In the broader context, obviously, there are a lot of costs coming onto employers at the moment through different avenues, so it may not be that you can make that case immediately. In the longer term, looking at how that could work is certainly worth exploring, particularly where you are looking to keep people in the workplace. We know keeping people close to or in the workplace is hugely important for them and their personal finances. Carers often have stretched finances anyway, but it is important for the broader piece for the wider economic picture for the workforce as well.
There are other practical things, not just about carer’s leave, that can be looked at which employers can do that should not be overly burdensome. We encourage the wider promotion of good practice. We have some guidance ourselves, just to plug the CIPD guidance, and I will share a link for that afterwards.
Baroness Wolf of Dulwich: My question was whether we have any hard evidence about the pluses and minuses, and the impact on the labour force.
Carl Quilliam: What we have been doing is talking to employers. I will not run through a list of stats—I have probably done enough of that—but as to how employers view this and where they may or may not see the benefits, there is support out there from employers.
Yvonne Sonsino: I agree with that.
Q120 Lord Londesborough: Can we return to the subject of ageism in the workplace? My question is quite broad. How prevalent is ageism? In answering it, can you provide any insightful data points? I am interested in how we describe the UK in relation to its international counterparts. How much are we suffering from ageism in the workplace and, within the UK, do we have any particular trends? Further to Baroness Liddell’s question, are we seeing it more within SMEs than we are within large businesses? I am going to guess that the answer to that is yes. Do we see any particular preponderance of ageism by sector or by region within the UK?
There are quite a lot of questions there, but I am favouring a response with some data, or perhaps you can refer us to some data, which would be helpful and insightful.
Yvonne Sonsino: The best study to look at for a comparative purpose globally is the World Health Organization data which looks at 53 countries and shows that ageism exists in approximately 50%.
Lord Londesborough: Yvonne, can I ask you to repeat? Did you say the world council?
Yvonne Sonsino: The World Health Organization. It includes 53 countries, and it compares and contrasts country by country. On average, globally, around 50% of people possess some ageist attitudes, whether towards younger or older people. In the US, it quotes 82% rather than 50%. That would be a good one to look at. I have not researched the UK figures today, which I should have perhaps, but it will be a good resource.
Lord Londesborough: The global average Is 50%, is that right?
Yvonne Sonsino: Yes.
Lord Londesborough: But it was 18% in the US.
Yvonne Sonsino: No, 82%.
Lord Londesborough: Carl, from a CIPD perspective, do you agree?
Carl Quilliam: I agree with that as a data source. The Centre for Ageing Better has also done some studies that I would encourage you to look at as well.
I am going to dodge the specific figures slightly, but actually there are some interesting figures in this space. From our autumn LMO in 2024, if you look at what you could call employers’ revealed preferences, you find that 59% of employers have hired people aged 50 to 64, and 17% have hired people aged 65 and above in the past three years. Interestingly, only 43% of employers are planning or likely to hire people aged 56 and above for the next three years. There is a dichotomy between what they are planning to do and what they have done recently. Only 19% are planning or are likely to hire people aged 65 and above over the same period. That is not ageism explicitly, which can be that bit more difficult to measure, but what employers are doing practically in their workplaces is hopefully an interesting addendum.
Lord Londesborough: Is there any evidence that the 50 to 70 year-old cohort is moving more into self-employment or freelance work, as opposed to being full-time payroll, particularly with working from home and digital communications and so on? Is this a trend that is happening, first question, and, second question, is it potentially an opportunity for people to have say phased retirements rather than cliff edge retirements?
Yvonne Sonsino: I do not have any specific data other than qualitative and anecdotal. Certainly, in my own peer group, I see people setting up side hustles and earning money from their hobbies, but I do not have any hard data, I am afraid.
Carl Quilliam: The only thing I would add is that we do not have hard data specifically on that point. There is evidence that people tend to downshift as they get closer to retirement—not everybody, but there is a cohort of people—so that kind of approach would reflect that really.
To go back to my point about changes in employment rights, I guess if it becomes that bit more difficult for people to get low or zero-hours contracts, you might see a concurrent rise in people reporting as self-employed. That is not definitely going to happen but it is something to consider in this space.
Q121 Lord Razzall: I have two slightly unrelated questions. The first is how do the pension retirement policies in the UK compare with other countries throughout the world? Where do we stand on that? Are we in the middle? Are we the best? Are we the worst?
Yvonne Sonsino: I can tell you exactly where we stand. I am just going to open the report so I do not misquote it. We are 11th out of 48 on an index called the Mercer CFA Institute Global Pension Index, which has been running for some 20 years. It measures three elements: the adequacy of pension, where we are ranked 15th out of 48; the sustainability of pensions—in other words, how reliable and sustaining it is likely to be—where we are ranked 17th; and integrity—the infrastructure and legal framework—where we are ranked 18th. We have dropped a place between 2023 and 2024, primarily due to decreases in the net pension replacement rate and the level of pension assets.
Overall, 11th out of 48 is not bad. The top performers include countries such as the Netherlands and Denmark, where pension systems have historically taken the top spot.
Lord Razzall: It is a bit like our position in the Eurovision Song Contest. What are the best and worst countries?
Yvonne Sonsino: Let me just look that up for you. I have the index in front of me. It is a 108-page report.
The Chair: Yvonne, just for clarity, is it the “pension system” meaning private and public combined?
Yvonne Sonsino: It is private and public systems combined.
Lord Razzall: While she is looking, Carl, do you want to add anything to that?
Carl Quilliam: We are broadly in line with a lot of the trends that you see. There is a trend to shift the retirement age up. In the Netherlands, it is 67, Italy and Greece are looking at 67, and Denmark has been in the news recently as looking at the age of 70 as a retirement age. The approach of harmonising the retirement age of men and women is broadly in line with trends, which I hope adds context to some of those figures.
Lord Razzall: Have you found the answer, Yvonne?
Yvonne Sonsino: I have. The A-rated countries are Netherlands, Iceland, Denmark and Israel, which are described as having, “A first-class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity”. At the bottom of the chart, we have the D-rated countries, which include South Africa, Turkey, Philippines, Argentina and India, and these are described as, “Systems that have some desirable features but major weaknesses or omissions that need to be addressed. Without these improvements, the efficacy and sustainability are in doubt”.
Lord Davies of Brixton: I should say that I have followed the index in its various formations for many years and have always questioned it. It is an interesting exercise, but would you agree that it is very dependent on the weights given to the various elements in the formula, pulling together completely different factors? In my view, there is a heavy political slant, in that it is heavily biased against pay-as-you-go systems, for example.
Yvonne Sonsino: I would say the weightings are very transparent. You make a fair point, and you can have a look at the weightings per element. It is weighted 40% on adequacy, 35% on sustainability and 25% on integrity. You can look at the individual scores in each country. It is organised by a very large group of international pension actuaries. I would like to think it is a very robust study and certainly not one that we have brought any political bias into.
Lord Davies of Brixton: I am afraid I disagree, but we will pass on.
Q122 Lord Razzall: I have a second question, which is rather different. Apart from recommending people to sit on the Economic Affairs Committee, what should the Government do to promote a better understanding of living longer?
Carl Quilliam: The Government have the second part of their pensions review coming soon, so I hope there will be things that they look at in that. From our perspective, particularly important will be looking at and promoting the value of occupational pensions to people and getting people thinking not just about their retirement but about a longer retirement.
Lord Razzall: Do you think it should apply particularly to younger people?
Carl Quilliam: We have a whole range of things that we will submit to the second phase of the review. It should definitely be broader and there is clearly a gap, in that a lot of people are not necessarily paying enough into their occupational pension. It is about looking at how that can be better supported, whether that is through shifting the compulsory thresholds or increasing awareness; there is a whole basket of things that the Government really should be looking at.
Something that we are really keen on—which is a small thing on the face of it and does not cost any money—is for employers to advertise the pension they offer in job adverts. The proportion of private employers that do that is quite small, only a third, and that is actually the same number that do not ever do it at all. When people are applying for the job, that can be a prompt to understand what their contributions are and start thinking about their pension. It is that bit higher in the public and voluntary sectors, but certainly for private sector employers—which is a huge group—we think that would be a really helpful intervention.
Lord Razzall: It is an important question for us because, apart from talking about it, we actually have to make some recommendations.
Yvonne Sonsino: I would add one more thing to that. This concept of the living pension is interesting. We already have a form of acceptable living wage legislation, and the living pension is a very similar concept. What you need to survive or thrive in retirement is a slightly different weighting—a slightly different basket of goods, if you like—from the living wage.
Some work I have been doing with my clients over the last five years is exploring this concept of living pensions in multiple countries—including the UK—calculating that living wage and comparing the outcomes of occupational or private pension schemes with the living wage. What we find is that many pension plans—even those deemed upper quartile or really good quality—fall short of the living pension. What is even more distressing is that women face an even bigger gender pension gap. They live longer than men, typically have longer periods of absence, and their salary may already be affected by a gender pay gap.
This concept of living pensions, comparing outcomes to that and looking at cohorts across gender and age is a very useful mechanism for driving change in this area. It will encourage employers to improve their plans and encourage a better buy-in to auto-enrolment increases, and the transparency it will offer will help us get to a better place, in time.
Lord Razzall: You obviously agree with that, Carl.
Carl Quilliam: Yes.
Q123 Baroness Liddell of Coatdyke: I am going on to a new question. What trends do we see in the relationship between productivity and age? I can see some circumstances where productivity will increase as someone gets older because of the nature of the job that they are actually doing. Is there anything that can be done to improve the productivity of older workers? To add another dimension to that, can we separate white-collar and blue-collar workers and the impact of productivity there?
Yvonne Sonsino: Thank you for that question; it is one that I have been asked a lot by my clients over the years, and some colleagues and I worked towards finding an answer to that. What is the relationship between productivity and age? I have submitted a written piece of research by two of my colleagues—Haig Nalbantian and Rick Guzzo—which explores this. They have done a meta-analysis across 24 different organisations in different sectors to explore that relationship. What they found was that bottom line output and productivity were unaffected by age at all. That was a good finding: that it does not matter what age you have in your working demographic, as it does not influence productivity or profitability.
The two elements that do influence improved productivity, however, are tenure and experience. Often, one would correlate those with older age, though not necessarily. Those two things—increased tenure and experience—correlate positively with better results. I would be very keen for you to take a deeper look into that research and use those findings.
On the second part of your question around blue collar and white collar, there is evidence that improving the ability of the working environment for older workers who are starting to suffer some sort of physical decline increases productivity. The BMW example has been quoted for ever, where there was a 7% increase in productivity when it introduced soft floors, better seating and increased weight-bearing machinery. We would need to be looking almost industry by industry, company by company, to see what improvements and enhancements can be made.
Carl Quilliam: I do not have a lot to add to what Yvonne said, which was very comprehensive. I want to go against the implied direction of the question. Yvonne is exactly right that there is not a huge difference in productivity, but there is a piece of OECD research that shows that a firm that has a 10% higher share of workers aged 50 and over than the average is 1.1% more productive, so actually it can have a positive impact, not just neutral.
That generally speaks to the idea that we would push very strongly that it is not about focusing on the productivity of all the workers but about focusing on productivity as a whole. How does that work within a firm and the wider economy? It is about all those things that we have touched on already: skills, upskilling, reskilling, how health is thought about in the workplace, occupational health support, the flexible working piece, and the wider business support environment, particularly for long-term smaller firms. That will all help workplaces as a whole, but will be beneficial to older people as well..
Q124 Lord Petitgas: No meeting can take place without some reference to AI. We are not going to have a relationship between AI and productivity, but we would like to understand the effect of AI on an ageing workforce. There is a question that can go both ways. Inevitably, AI will probably either create jobs, but more likely in the short term destroy them. Is it more likely to destroy the jobs that the ageing cohort would have naturally, or is it possible that the silver economy could benefit from AI? Maybe we can take the negative piece first. Is there a risk that the very jobs that they were equipped for will be those that disappear with AI?
Yvonne Sonsino: I refer to two excellent pieces of research on this one, both published in spring 2025. McKinsey’s research is predicting that AI will reduce headcount in certain sectors and increase headcount in other sectors. It is very sector-specific and talks about specific jobs. It is a complicated and comprehensive report. My take on it is that what will play out is some sort of equilibrium over time. If you want the specifics per job and per industry, that is the report to read.
The second item of research is the World Economic Forum Future of Jobs Report 2025, which includes five drivers for the future of jobs and the changes there. Demographics is one driver, but it also includes climate change, technology, et cetera. While it predicts a very high degree of job instability—about 39% over the next five years—it also talks about a net employment increase of 7% globally. Again, it looks at sectors, specific scenarios and forecasts. Quite a bit of deeper digging is needed into those two reports to surface some of the detail you might need on this.
Lord Petitgas: Before we go to Carl, can we turn the laser beam a little more on the ageing cohort? I get that it is by sectors and that the balance may be positive or negative over time, but is the impact on this group good, bad or neutral?
Yvonne Sonsino: It depends on the jobs they do. For example, the McKinsey report talks about reductions in jobs in service operations, supply chain and inventory management. To the extent that we have an ageing population in those particular jobs, there could be somewhere between a 3% and 20% reduction in those jobs over the next three to five years.
Whether we have any good, solid data anywhere that shows what age profiles are in what jobs is questionable. I can certainly do it at an organisational-specific level in my own company, because we often run pay surveys, and the data comes in with the incumbent in that role, so we know how old they are, what job they are doing and what salary they are paid and we can track it that way. But we need to do it at a more holistic, UK level, and Carl may have some of that.
Increases in jobs are in areas such as strategy and corporate finance. We often see some quite senior and experienced people—possibly over 50—in those jobs. IT is typically a young profession, but for some clients I am working with, much of their IT population is ageing millennials at the moment. Another area where jobs are likely to increase is product and service development. I have to say that probably favours a younger cohort. I have somewhat answered the question, but not at all completely.
Carl Quilliam: I am going to be in a similar situation. I will throw in another piece of research that is worth looking at. There is an interesting piece from the Tony Blair Institute, from October last year, that looked at AI in the labour market. There are a couple of things that came out of that that I thought were worth drawing out.
It talked about the need to start thinking about job quality and how AI can improve it. It has not been a huge part of the conversation yet, but a lot of the things that we have talked about underpin job quality. If we can look at AI as a way to improve that, that is worth exploring. It also suggested that the Government do some detailed scenario planning for how AI might develop, because there is a lot that is still uncertain.
This is probably the third or fourth time I have mentioned it, so do shout me down, but both those things speak to the idea of having a broader workforce strategy. There are so many different pieces—AI being a big one—that are shifting the workplace at the moment. I would very much suggest reading that report and thinking about it as a holistic piece.
Unfortunately I do not have them with me now, but we are doing two bits of research that speak to this in different ways. We are doing a report on reskilling, which will be published in July and I can share it with you when that happens. We are also doing some action research that is being funded by Innovate UK, looking at the people issues that we need to address as we roll out AI adoption across the economy. That has a longer timescale to it, but it should pick up on some of these things as well.
There is a lot of research out there, but there is still uncertainty around how we choose to adopt this and how it gets adopted across the wider economy. Some of the things that Yvonne talked about could shift and change as AI develops, becomes smarter and can do more. It is one to keep a watching brief on.
Lord Petitgas: Before I lose the microphone, I will make my own observation and conclusion. In some of the earlier sessions we had, I remember taking notes that AI was going to benefit the silver economy; that somehow all the segments—from experience et cetera—would be better and well-equipped. In this session, I am getting a much more balanced, if potentially slightly more negative perspective, that we might take from this.
Q125 Lord Turnbull: Many people are looking for greater flexibility in how and when they receive their pension, and matching it up with their own ups and downs in income. The UK state pension scheme has a very beneficial arrangement where you can defer taking the money and get a larger pension a bit later on. Interestingly, a number of employers have not followed in that vein. One example is the NHS, which seems to have adopted the opposite policy, where you get punished if you delay taking it or carry on working.
Is this an area where you think more developments could be seen, so that people are getting either something that is actuarially equivalent or with a slight incentive to keep people working? Are those kinds of schemes under active consideration?
Yvonne Sonsino: From a private plan perspective, there is a lot more flexibility now than there used to be. What is a little negative is that some of the flexibility includes people taking all cash and not making preservation for an income for life. That is one issue that marks countries down in sustainability of pensions. Getting that income for life is really important, given that we are living longer.
I believe increased flexibility in the way you draw your pension and the timing of that to fit in with phased and flexible retirement programmes is crucial to our future workplace. Some countries are already adopting this and adding incentives. Germany and Austria, to give two examples, are adopting these types of incentives to delay drawing your pension and then taking a larger number at a later date. I cannot comment on the NHS scheme or other public pension systems; I have not done any work on that recently.
Having the flexibility to be able to carry on working and draw part of your pension, defer your pension, or a combination of both will make a big beneficial difference to individuals' choices and capacity as time goes on.
The Chair: Before Lord Davies comes in, did you want to add anything, Carl?
Carl Quilliam: I do not know off the top of my head, but we collect a lot of data in this space, so I am happy to go back and look at our previous LMOs and share that with you. There are probably things in there that would be informative.
Lord Davies of Brixton: There is a lack of knowledge that the state pension age is going to start increasing in less than a year, and in three years will have increased from 66 to 67. Is this something that private sector employers should be thinking about because of the impact it has on their workforce policies, and is it something they are thinking about?
Yvonne Sonsino: Employers are well informed about changes to retirement age. When we look at how private employers organise themselves, certainly for bigger companies we find that there is often a dedicated pensions manager, for example, who will know exactly some complexities of these changes. We have a very complex system here, although that is true across the world when you start to look at pensions.
There are a lot of other benefits that sit alongside pensions—for example, life insurance. What is difficult to get to grips with in this area is that, if people start working longer—our research shows that 86% of people intend to continue working past the traditional retirement age, so it is going to become a thing of the future—companies that have not thought about increasing the upper age limits for life insurance and disability insurance could be left with challenges if people die in service after those ages. There is an awareness of the increasing state pension age.
I come back to my point on living pensions. So many of the UK’s pension programmes now are defined contribution by design: you pay money in, it earns investment returns, and the pot of money at the end buys you an annuity or a lump sum. Even some of the very best pension systems are just not designed to last as long as life expectancy, particularly when we think about that 10 years of unhealthy life expectancy at the end of life and the end of career. More could be done to unpack the realities of the outcomes of those pension systems.
Obviously, with a later state pension age, there is a gap to bridge between when people may fall out of the workplace and when state pension kicks in, and that gap can be significant.
If I just look at my own, for example, I have worked for 43 years, and for most of them I was expecting to retire with a state pension at age 60. My retirement age is now 66 and eight months, so I have nearly a seven-year gap to bridge, which I might not necessarily have known about. I just happen to have been a pension practitioner for 40 years, so I do know about it, but I would say that many women in my position do not understand the financial gap that they are facing. The concept of a living pension and transparency there could help.
Carl Quilliam: We have quite a lot of data in this space that I do not have to hand but I will share it after the fact.
Q126 The Chair: I am going to ask the final question and it is an unfair one, I will warn you in advance; I apologise.
If you had to have three specific policy recommendations for the Government—not this Government but any Government—about how to advance this agenda, what kinds of specific things would you urge them to do?
Carl Quilliam: It will be no surprise that we would suggest a workforce strategy, led by a cross-government workforce commission, that can feed into the industrial strategy. That is really important and could play a really important role in bringing a lot of this stuff together.
Thinking about investment in skills and building institutional capacity—particularly to support older the workers but also more generally—is really important there.
I am going to cheat a little and put flexible working and occupational health support together; those things together could be really impactful in helping more people to work better for longer.
Yvonne Sonsino: I am glad you jumped in quickly there, Carl—you gave me time to think.
My three—not necessarily in priority order—would be flexibility around working and phased retirement, with maybe a blueprint of what flexible retirement policy might be. Government could easily spell that out.
Number two would be health prevention tactics. The healthy life expectancy gap is growing. Globally, in the last three years, we are experiencing seven months more in ill health; in just three years, healthy life expectancy has deteriorated by a further seven months. We need to do much more work around prevention. I am a big believer in nutrition and lifestyle impact on non-communicable diseases and outcomes there.
The third one would be transparency around the value and outcome of pensions, including proposing a living pensions target that looks specifically at gender cohorts in addition.
The Chair: We have reached the end.
Yvonne and Carl, thank you so much. As I said earlier, we will be giving you a transcript to look through so you can make any corrections. Yvonne, I would particularly like to wish you all the best for your retirement on Friday.
Lord Razzall: You are exactly in the cohort of age that we are looking at, and you are letting us down—you are retiring.
Yvonne Sonsino: I know.
The Chair: The only thing I would say is before you retire on Friday, please send us the material that you promised us, so we do not eat into your retirement years by asking you for it next week.
Yvonne Sonsino: I will. No problem at all.
I am a trustee of the International Longevity Centre, which I cannot retire from just yet, so I am still actively involved in this area and will supply that index for you. Thank you, it was a pleasure to offer some evidence today. I hope it is helpful.
The Chair: Thank you again, Yvonne and Carl. With that, the meeting is now concluded.
