Record levels of 65-year-olds are choosing to stay in work as a result of increases to the state pension age, new research suggests.

An analysis by the Institute for Fiscal Studies (IFS) found that increasing the pension age to 66 has led to around 55,000 more 65-year-olds in work across the UK, with employment rates reaching 42 per cent for males of that age and 31% for women.

This is likely to be an all-time high for female 65-year-olds and the highest on record for men.

The research also revealed that those in more deprived communities are more likely to be adversely affected by the policy change and are being forced to work longer as they cannot afford to retire.

Laurence O’Brien, a research economist at the IFS, said: “There have been striking increases in employment of 65-year-olds in recent years as the state pension age rose from 65 to 66. Indeed, employment rates for this age group have reached record highs.

“However, it is still the case that over 90% of people do not change their employment decision at age 65 purely as a result of the higher state pension age.

“This is mainly because most people have already left the labour force before turning 65. For most 65-year-olds – around 640,000 of them – a higher state pension age simply results in lower income rather than changing their work patterns.”

The age at which people can claim a state pension has been rising in recent years, most recently with an increase for both men and women from 65 to 66 between December 2018 and October 2020.

This was the first change for men since the late 1940s, but for women it had previously risen from 60 to 65 between 2010 and 2018.

It is due to increase further from 66 to 67 between 2026 and 2028 as the UK Government attempts to counteract some of the financial pressure caused by an ageing population.

Age Scotland chief executive Brian Sloan said there should be a focus on age-friendly workplaces to ensure that older people feel comfortable working later in life.

“As we live longer and the State Pension age rises, it's clear that working longer is becoming an increasingly common part of later life,” he said.

“Many older people don’t feel ready to retire as soon as they reach pension age as they enjoy the social aspect of working and want to continue utilising and sharing their skills.

“However, it’s important to remember that there is a big difference between choosing to work longer and having no choice but to keep working.

"Many older people will not be in the financial position to retire immediately as their savings aren’t at a level that would allow them to do so.

“A further rise in State Pension age also presents concerns for those unable to work, as they will be living longer on a lower income before receiving their first pension payment.

“As the number of over 50s in our workforce will only grow as the population continues to age, there must be a continued focus on creating age-friendly workplaces, combatting ageist stereotypes, and ensuring access to advice and support on planning for retirement.

“Older workers bring a wealth of experience and skills and can provide valuable mentoring to younger generations, so it’s only right that we see investment in them.”

The IFS study found that the increase in those working at 65 is being driven by people staying in their existing job for longer – not gaining new employment.

The vast majority of those who have delayed retirement are in full-time work, when they would only need to work around 20 hours a week at the National Living Wage to make up for the loss of pension income.

There was also “strong evidence” of people living in deprived areas working more as a result of the change, compared to those living in less deprived areas.

The figures showed that in the most deprived areas, women’s employment rate at age 65 rose by 13 percentage points and men’s by 10 percentage points. In contrast, in the most prosperous areas, female and male employment rates at age 65 rose by just 4 and 5 percentage points respectively.

Jonathan Cribb, an associate director at the IFS, said: "The sharp increases in employment have come in particular from those in poorer areas, and for those who have lower levels of education, suggesting that without a state pension they cannot afford to retire.

"But of the 55,000 extra 65-year-olds who are in employment, 35,000 are in full-time work even though only 20 hours of work each week at the National Living Wage would be sufficient for most to make up for the delay in the receipt of their state pension.

"Given that a quarter of people working full-time in their mid 60s want to work fewer hours, this suggests there may be an unmet desire for many approaching state pension age to be able to work part-time, or more flexibly, than they are currently doing."