Pensions crisis paves way for research into working longer
The growing problem of people’s savings being inadequate for their retirement led a team of Brunel researchers to investigate the economic impact of extending working lives.
As part of a European Commission-funded project, professors Ray Barrell and E Philip Davis from Brunel University London’s economics and econometrics team looked at the determinants of consumption, showing that the level of changes in housing and financial wealth were significant determinants of a lack of savings in seven countries.
This led to research into the impact of extending the time period in which people work, and found that increased participation of older people didn’t significantly reduce productivity.
This study formed the basis for a report to the Department of Work and Pensions in 2011, looking at the impacts of extending working lives on the economy.
Analyses were carried out on the impact of one, two and three years extra working lives on consumption and output in the UK, finding that although the savings rate would be reduced, savings in retirement would improve.
The analysis was later extended to other countries and published in late 2011. The group’s research showed that in most countries analysed problems of inadequate savings could be fixed by raising the working age by three years, with only Greece, Spain and possibly Portugal facing serious problems because of their generous replacement rates and low retirement ages.