The increase in the state pension age has led to more Britons claiming in-work benefits from the Department for Work and Pensions (DWP), new research shows.
The Resolution Foundation’s Under Strain report found that real spending on these benefits has risen by a third over the past decade and disability benefits, including Personal Independence Payment (PIP), have risen by 89 per cent. Spending on health-related benefits for those in employment has risen from £28 billion to £43 billion over this period.
According to the think tank, changes to the state retirement age and the increasing ageing of the UK population are contributing to rising public spending on disability benefits for working people.
Between 2013 and 2023, there was a 25 percent increase in new applications for benefits such as PIP, equivalent to 272,000
According to the Resolution Foundation’s findings, raising the retirement age will result in more older people having to claim benefits in their working age rather than in their retirement age, such as care allowance.
In addition, recipients of disability pensions in working age are generally still entitled to these benefits when they reach retirement age.
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This will remain the case until a situation triggers a reassessment by the DWP and entitlement to a pension-equivalent benefit arises.
The increasing number of cases is cited as the reason for the projected increase in disability benefit expenditure between 2013–14 and 2028–29.
In 2012/13, around 5.9 million, or 16 percent, of working-age adults in the UK reported having a disability.
However, by 2022/23 this number will rise to 8.9 million, almost a quarter of the working-age population.
In its report, the Resolution Foundation noted: “Overall, it is easy to see why there is so much political concern about the rise in health-related benefits for those in employment. But what has driven up the number of people eligible for these benefits over the past decade? One plausible explanation is demographic change.”
“The UK population is ageing and it is clear that older people are more likely to suffer from a disabling illness or impairment than younger age groups.”
The current statutory retirement age is 66 and is set to rise to 67 between 2026 and 2028.
A further increase to 68 years is scheduled by law for sometime in 2044 or 2046, but some analysts suggest this step should be taken sooner.
In its recommendations for cutting welfare spending, the foundation calls on any future government to address why so many people of working age in the UK struggle to stay in work due to health reasons.
In particular, the think tank pointed out that the NHS and other public services will play a key role in tackling this problem.
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Lindsay Judge, head of research at the Resolution Foundation, said: “Real spending on incapacity and disability benefits for working-age people has increased by £15 billion over the last decade, despite several policy initiatives to reduce it.”
“Spending is also expected to rise in the coming years, by a further £20 billion a year by the end of the decade.”
“The rise in disease and disability poses a major challenge for policy makers and the millions of people whose standards of living are affected by their disease.
“There are no easy solutions to this problem. It’s not that people are cheating the system or that it’s somehow easier to apply for benefits. Nor is it that so-called ‘benefit cuts’ will lead to easy, painless savings.