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LucyGransnet (GNHQ) Thu 19-Nov-15 11:03:28

Raising the pension age: is it really worth it?

We hear from social policy expert John Macnicol on the coming changes to the state pension age - and why he believes the government should be considering the alternatives.

John Macnicol

Raising the pension age: is it really worth it?

Posted on: Thu 19-Nov-15 11:03:28


Lead photo

Who will lose most under the new State Pension policy?

Retirement has long presented a challenge for advanced industrial societies: it contributes greatly to economic efficiency and workforce turnover, yet it is also very expensive in terms of State Pension costs. Recent years have seen moves to raise state pension ages in the UK. They are henceforth to be linked to life expectancy, so that they could rise to 68 by the mid 2030s and 69 by the late 2040s.

Many commentators, particularly those from the business sector, would like to see ages even higher than this. Ostensibly, this is being done in response to demographic and fiscal pressures. Yet the annual increases in longevity are relatively small, and the real problem is the size of the age cohorts that will move into retirement in the future (caused by high birth rates in the late 1940s and the mid 1960s and by net in-migration). A little-mentioned motive is the neoliberal strategy of attempting to create economic growth by expanding labour supply, plus the fact that raising state pension ages has been a cause on the political right for decades (for example, Mrs Thatcher's cabinet considered raising the age to 70 in 1989).

...working another few years might not present many problems for middle class, white collar people, but it will be an impossibility for those worn out by heavy manual labour.

Is this a wise strategy? The awkward fact is that there is no necessary connection between the size of a workforce and its total productivity: the latter is much more a function of factors like technology, the price of raw materials, a country’s industrial structure, and so on. One can see this clearly illustrated in the cases of Germany (considered to be a model of economic virtue) and Greece (considered to be economically dysfunctional in many quarters), both of which have remarkably similar average ages of retirement and proportions of their populations aged 65+. In addition, there are several troubling issues: whether extending working lives will damage the job prospects of the young – an especially sensitive issue at a time of high youth unemployment; the fact that, were state pension ages raised to 69 tomorrow, some 1,500,000 to 3,500,000 new jobs would have to be created; how to overcome the manifest class and regional unfairness that will be exacerbated, given that de facto retirement ages vary greatly by social class, as does life expectancy at later ages (there is a seven-year difference in life expectancy at birth between the top and the bottom social classes); finally, working another few years might not present many problems for middle class, white collar people, but it will be an impossibility for those worn out by heavy manual labour.

There are other, more imaginative, humane and realistic policy alternatives – but they have been hardly considered: a citizen's income for all aged 60+ to supplement the diminishing earnings that most older workers experience, payable as of right and replacing the state pension; 'age management' policies targeted at older workers; employment quotas for older people, and so on.

Some of these would be quite controversial – but the direction in which we are heading may prove to be even more so.

John Macnicol is Visiting Professor in Social Policy at the London School of Economics. His new book, Neoliberalising Old Age is published by Cambridge University Press and available from Amazon.

By John Macnicol


Maggiemaybe Thu 19-Nov-15 11:16:56

As one of the 60 year olds with over 40 years of contributions who has to wait another 6 years for her state pension, I'd say just don't get me started.....angry

ginny Thu 19-Nov-15 11:21:18

Ditto !

gillybob Thu 19-Nov-15 11:41:56

I am 53 and have worked since I was 16. I only took the bare minimum time off when my 2 children were born and returned to work within a couple of months. I am now being told that my predicted pension age is 67 which will undoubtedly rise over the coming years. Perhaps there will come a time when only the priviledged few (those with nice fat private pensions) will be-able to retire at all and those of us in the "real" world will have to work until we drop.

loopylou Thu 19-Nov-15 12:04:01

Me too Maggiemaybe!
I'm 61 and struggling to work because of ill health yet I have another 52 months before I can retire and I seriously wonder if I'll live long enough to get my pension.
Of course making people work longer means some will die before claiming, and the length of time a pension is paid will be shorter.

I never expected to have to work longer and being the sandwich generation I'm pulled from both ends sad and angry

Luckygirl Thu 19-Nov-15 12:18:57

I really do feel for all those of you who were sold a pup in the form of the NI scheme and now find themselves having to work well past the age at which they had expected to retire.

I was lucky and skimmed in to the bracket for getting my pension at 60 - a reduced pension because of missing out on the rules that compensate for years taken to rear children - but a pension nevertheless.

I do question the wisdom of this new policy for many reasons, but particularly because of the sorts of ill heath that gradually afflict those in their 7th decade and make full time working difficult. There is no way that I could have been in full time work for at least the last 5 years, and I would have been a burden on the state with sickness benefits. Better that this burden should have been in the form of retirement pension and my job taken by a young person starting out and life with a mortgage etc.

loopylou Thu 19-Nov-15 12:24:52

I think that what made it worse was first being told I had to work to 63 years and 4 months, then 65 and 3 months. I fully expect them to move it again before I get there , in which case I will truly despair.

Maggiemaybe Thu 19-Nov-15 22:58:21

Well at least we're getting some publicity for the issue now:

The more people who know about it, the better. WASPI (Women against State Pension Inequality) is working tirelessly on behalf of women affected.

Shula Fri 20-Nov-15 04:37:59

Older people in there sixties need pension . Not go on sickness benefit , give the younger people a job.

JessM Fri 20-Nov-15 09:05:17

Isn't the real underlying expenditure issue for politicians public sector pensions. These are paid for by the state - there is no investment pot to fund them. So all the teachers NHS staff, police etc whose index linked pensions have to be funded by taxpayers. On top of their state pension. Many of these are middle class and have a very good life expectancy at retirement age. Take my cousin for instance - retired about 30 years now from academic life and still going strong. Guess her pension must be in the region of 35k pa.
Noticed the "you're getting on when the retired policemen look young" syndrome? I have.
This has probably been one of the hidden agendas in all the outsourcing and privatisation we have seen in the last 30 years. (all those retired water, electricity, gas etc workers no longer paid for by state). And one of the reasons why Osborne is on a mission to further "shrink the state"?
Some European countries have granted much earlier state retirement ages to public employees than most of ours and, since 2009, this has been causing them serious problems.
No easy answers - on the one hand older people in the workforce can be preventing the young from progressing in their careers. On the other hand if huge numbers of healthy late middle aged people are leading a life of enforced and heavily state-funded leisure, that is also... not fair on the young who have to generate the wealth and pay the taxes to fund this luxury.

WilmaKnickersfit Fri 20-Nov-15 10:28:32

This luxury?! We paid for our pensions through lower salaries and then contributions and I don't know anybody with a public sector pension of £35k! They'd have to be on at least £52k to get that amount! shock

And public sector pensions are now linked to inflation, not earnings so most get no increases because inflation is not increasing.

You are making sweeping statements about thousands of people. The exception is not the norm.

Charleygirl Fri 20-Nov-15 11:19:04

I agree with every word that WilmaKnickersfit has written. We had much lower salaries throughout our working lives so I do not see where the luxury comes in. I worked for every penny I get in the form of a pension now, having worked full time from 1962 until 2002 with no break in service.

gillybob Fri 20-Nov-15 11:29:24

I know at least 5 people that I can think of who retired at 55 with very good pensions. All ex public sector. 1 NHS, 2 police, 1 fire service (woman) and 1 civil service. Actually make that 6 I know an ex school cook too.

I can appreciate that there is a problem with people living too long but it will always be those who are well off and with the best quality of life who will statistically live the longest whilst those of us unfortunate enough to have to work until we are almost 70 will no doubt drop dead soon after we are able to retire.

Welshwife Fri 20-Nov-15 11:32:38

Jess I too have one of these pensions you are speaking of - the maximum pension for a teacher is 40% of final salary. When I retired not many female teachers were actually able to fit in 40 years of teaching to receive this amount of pension - unless changed greatly it is calculated at 1/80 of final salary for each year worked.

Salaries have always been reduced because of the pension even though a large proportion of a teaching salary is taken as superannuation.

As Wilma says you are making unfounded sweeping statements.

Charleygirl Fri 20-Nov-15 11:36:46

I could not afford to retire at 55 although I could have if I had wanted. I was still paying a hefty mortgage so I kept going until 60 and then used my tax free lump sum to pay it off leaving me with zilch extra but that is London living.

BOSSY1955 Fri 20-Nov-15 11:43:19

I too am furious. I have paid my'stamp' in full and now need and want to help out my sick and elderly parents.

This I could have done comfortably if I could have had my pension at 60. This ruling must be changed!

gillybob Fri 20-Nov-15 11:56:08

Even the thought of retiring at 60 makes me smile Charleygirl but working on and on until almost 70 is a daunting prospect.

nannymoocow Fri 20-Nov-15 12:34:13

I again urge all ladies to sign the petition and join the WASPI Facebook page.
This campaign is our only hope of getting this mess sorted out. I agree the state pension age needed to be raised but it has been done in such an unfair way for us ladies born in the 1950s. Please support this. It was mentioned last night on the BBC Watchdog Pension Programme.

mcem Fri 20-Nov-15 13:03:33

Well I'll be upfront about my luxurious level of pension.
DWP £ 6514 plus teaching pension funded through my substantial superannuation contributions and annuity from personal savings (avc's)
£8798. After £ 960 deducted in income tax that's approx £14350 net.
Luxury NO but because of my own contributions and savings I'm ok thanks.
Please note that this is not quite close enough to the level where I can claim pension credit and concommitant benefits.
I had 2 breaks in teaching service for my DCs but always had parttime jobs and paid NI.
Anyone else claiming an equally extravagant level of 'free' pension like to 'fess up'?

JessM Fri 20-Nov-15 13:55:41

Well I have succeeded in provoking debate it seems.
Senior teachers, senior academics and senior managers in public sector all get over £53k Wilma.. I knew a deputy head who retired and bought himself a whopping new Audi to celebrate. Not many middle managers in the private sectors will be anything like as well off.
I think it is a luxury for a society when people can retire, live for 25-30 more years and have lots of holidays. This is not uncommon it would appear.
As a contrast I was talking to a neighbour in her 80s earlier. Her husband was a gardener. She was telling me she had only ever travelled out of the UK once, when her husband treated her to a weekend in Amsterdam.

Charleygirl Fri 20-Nov-15 14:14:58

gillybob I appreciate that the idea of retiring at 60 now looks ridiculous but that was the norm in 2002. I was so fortunate that I was born in 1943 and not 10 years later.

I think that it is disgraceful that people are having to drag themselves to work in their mid to late 60's and as somebody else mentioned, it will be retirement and then death fairly soon because the retirement age will be in the 70's. It is fine for the likes of George Osborne with inherited wealth and I do not think that he has had a "proper" job to dictate to us at what age we should receive our pensions.

Galen Fri 20-Nov-15 14:24:23

I was a senior civil servant and I can assure you that my total pensions ( OAP, civil service and late husband's pension ) do not total up to £53k gross.

Jane10 Fri 20-Nov-15 15:15:36

As an ex NHS employee I must reiterate that I contributed to my pension. It was not somehow free or tax payer funded. In addition I also had to buy past added years to make up for time spent with children. A significant proportion of my salary just disappeared towards my pension. It was hard at the time but worth every penny to me now. Saving for my pension was very important to me. I looked on it as buying my freedom from work. I also bought FSAVCs.

loopylou Fri 20-Nov-15 17:45:15

I'm ex-NHS too, I worked damn hard for every penny of my pension, low pay for years, unsocial hours etc. I remember friends who weren't in the Public Sector being horrified at how low nurses pay was/is.
As well as continuing to work I spend 20-30 hours a week caring for my very elderly parents, it's bl...y tough.

Luckygirl Fri 20-Nov-15 17:58:46

The whole idea of making people work till they are older ignores their role as carers to elderly parents.

I just detest the principle that you pay in under one expectation and the goal posts are moved - that is just plain dishonest. If a private pension scheme did this, they would be in trouble.

mcem - my pensions amount to just over half of what you get. If it were not for the fact that my OH gets a slightly larger pension we would be in trouble. Neither of us have a total pension that it would be possible to live on. If my OH were to die I would be right in the mire.