Gransnet forums


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


rosequartz Sat 21-Nov-15 14:57:38

WilmaKnickersfit Fri 20-Nov-15 10:28:32
I agree Wilma

And we do keep being told off on other threads if anyone dares to mention the dreaded words middle class.
Presumably, because my Civil Service pension is so minute, I can be termed 'working class' (it's about one-seventh of the amount that your cousin receives JessM). But then I was only a civil servant for 16 years - before DC I worked in Local Government and was cheated out of both my state pension for that time and any local government pension I could be receiving.

Still managing though, not in the poor house yet.

rosequartz Sat 21-Nov-15 15:02:53

However - I do believe that raising the pension age higher than 65 is not worth it.

The more over 65s there are who continue to work, the fewer the jobs for young people. Young people would probably earn less, but even so the more young people in work the more tax revenue there would be to help to fund pensions for those of 65+.

It's all very well for a politician, a writer, designer, office worker working into their 60s and 70s but it is not fair on nurses, firemen, policemen, builders and those in very physically demanding jobs.

rosequartz Sat 21-Nov-15 15:10:21

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.

That is very true Luckygirl

And I agree about your last paragraph. Yes, DH gets a pension too, but his public sector pension (still only amounting to about the same as his State Pension despite 23 years in a fairly high position!) would be cut by two-thirds were anything to happen to him.

rosequartz Sat 21-Nov-15 15:16:18

And what of the ladies encouraged to pay the married womans 'small' stamp as they'd get a pension on their husbands contribution
Yes, I was assured that I would still get a 'full pension' on DH's contributions and was caught out under that lie scheme elfie.

Regalo Sat 21-Nov-15 15:49:06

Sorry Jess...your facts are wrong. I was a deputy head and earned nowhere near £53. I don't know where you got your facts from but I can assure you that my pension is not at that level....I get £657 a month and no state pension until 2020. I struggle.

gran12 Sat 21-Nov-15 18:09:59

Even public sector workers who earn over £52K do not get anything like a pension of £35000, when they retire. The average public sector pension is about £9k per year, and yes they contributed to that. There are many people in the private sector, who never contributed or had an opportunity to do so, who will be relying on the welfare state for added support such as rental payment when they reach state pension age. We the taxpayers will have to pay for that too. I have witnessed staff working into their sixties who are ill, but cannot retire. That also has an impact on sickness absenteeism.
Our economy has changed, many people in their sixties now have mortgages, often on a single income.
People should stop blaming the public sector nurses, teachers and civil servants who keep this country running.
Yes there is an aging population, but staff should have been given more time to plan their retirement. Having only a few years is insufficient.

As a nation we would work better together than be divided. It affects us all.

rosequartz Sat 21-Nov-15 18:24:00

Most women did not complete 40 years in the Civil Service; many men did not complete that much either. There must be very few on that level of pension. Civil Service salaries are known to be lower than equivalent salaries in industry as, at one time, the pension was non-contributory, although 1.5% was taken out for a spouse pension.
If anything happens to me before DH he may have the price of a couple of pints a week from his spouse's pension.

I remember listening to a colleague whose husband was in banking telling us just how much her husband would be getting in lump sum and pension. An astonishing amount compared to DH's pension - who spent years in a public service job, compared to banking which got us into such a mess.

but staff should have been given more time to plan their retirement. Having only a few years is insufficient.
I agree, gran12, it's like having the rug pulled from under your feet.

loopylou Sat 21-Nov-15 18:33:27

We have a mortgage, I'm the main breadwinner and my NHS pension is about £6000 and taxed.

I'm very angry at being forced to work to 65 years and 4 months, whilst caring for a blind 92 year old father and a very frail 89 year old deaf and very arthritic mother - they live a 48 mile round trip away and I visit every day after work.

As for it somehow being my fault angry because I worked bloody hard as a nurse for 35 years.......

I hadn't planned on working past 60, I'd hoped I would be able to care for my parents and help out my DCs by childminding....fat chance!

rosequartz Sat 21-Nov-15 18:40:33

I had hoped to work after 60, but due to ill health I wasn't able to even work that long.
We still had a mortgage and one DC at university.

So it was a relief when my pension kicked in at 60, I do sympathise.

loopylou Sat 21-Nov-15 19:44:54

Thanks rosequartz, I don't mean to winge because, like you, many are far worse off than me, so I apologise.

I guess none of us knows how life will pan out, I should count my blessings and be very thankful I'm not working until I'm 70 which my DCs probably expect.


annsixty Sat 21-Nov-15 20:07:31

Many people who retired several years ago on a public service pension have benefited from high inflation in the eighties/nineties as their pensions were indexed linked to inflation. Some were getting annual increases in their pension of high percentages I can't say the actual figures as I don't have them to hand but this is fact, not supposition.

rosequartz Sat 21-Nov-15 20:13:44

loopylou, no you're not whingeing, but it did put our plans into disarray. DH worked longer than 65 and our mortgage is paid now and we are fine.

However, I do think it's wrong to change the goal posts and upset people's plans for their retirement. Mine was different.

One reason for trying to hang on to our house and not go into care (I would rather go to Switzerland!) and have something to leave to the DC.

Charleygirl Sat 21-Nov-15 20:30:22

I personally think that if the goal posts are going to be changed that people should be given 25-30 years to make changes in their lives.

I was fortunate to retire at 60 but I worked until I was 65 because I had no savings and I was able to save and have work done to my house during that 5 year working period. The only thing that stopped me working longer was breaking my ankle.

Blinko Sat 21-Nov-15 21:09:59

I was fortunate to be born in 1947, just beating the hike in pension age. Though I may be ok financially, I am appalled that so many people (women) will have to work anything up to seven years longer than they had expected to work.

I worked till I was 64 when I was made redundant. I found that, even with an office job, as I grew older routine stuff was fine but my ability to deal with problems diminished. Anytime after 3pm, I was only good for the less demanding aspects of the work. Anything more complex had to wait till the following morning (as I'm a 'morning person').

Heaven help those who work in manual jobs. How on earth will they manage to keep going till nearly 70!

Why can't they introduce a scheme whereby older workers retire and are replaced directly by taking on a young person to fill in behind them. So the cost of the (hopefully earlier) retirement pension is at least partly offset by the young person coming off benefits. There could be an overlap whilst the young person is trained up.

Grrr..... angry

WilmaKnickersfit Sat 21-Nov-15 22:14:09

Having the rug pulled out from under your feet is a perfect description of what's happening and the more I think about it, the more upset and angry I feel. I've known for some years now that I would have to wait until I was 67 for my State pension. The thought that I might have to wait even longer if the government decides to move the goal posts again fills me with dread.

I think one of the turning points for pensioners was when the rules were changed so someone could carry on working and still get their State pension. Another was the successful legal challenges over employees being forced to retire at a certain age. I rarely saw an older person still working and when I did it was usually because they needed the money. I used to feel a bit sorry for them, but now it could be a much more common sight.

JessM Sun 22-Nov-15 08:11:31

Sorry guys, I do appreciate that many women get a tough deal on pensions. I was trying to provoke debate and to some extent succeeded. But what is the solution?
(The £35k number was straight from a horse's mouth btw - from a retiring professor)
Here's the problem:
On average public sector workers get a better deal than those working in the private sector (bankers are the exception as we all know) - and that's not fair.
We can now expect to live a lot longer than our grandparents did - and that's not fair.
Richer people can expect to live longer than poorer people - and that's not fair.
Our grandchildren will have a huge tax burden providing pensions and health care for our generation - and that's not fair.
Many of us have managed to buy a house to live in due to much lower property values when we were young. Many of our kids and grandchildren won't be able to. And that's not fair.
Men were always expected to work longer than women despite their shorter life expectancies - and that was definitely not fair.
And yes - women in our generation have done less well out of pensions due to childcare breaks, poor education and career opportunities etc

With all this unfairness around not easy to see any solutions - but there is a big problem.

Info from National Office of Statistics re life expectancy 2012-2014 England and Wales:

For men at age 65, life expectancy was highest in Kensington and Chelsea (21.6 years) and lowest in Manchester (15.9 years). For women at this age, life expectancy was highest in Camden (24.6 years) and again lowest in Manchester (18.8 years).

Welshwife Sun 22-Nov-15 09:17:06

One aspect of your list above Jess the buying of property - I agree that it is very disappointing for younger people trying to get on the property ladder unless they have some family help etc, but maybe Banks and building societies should consider this - in a majority of cases paying rent is far more expensive than paying a mortgage on a similar house. Maybe the money lending institutions should consider that if a person (or couple) have paid rent, for whatever period of time they deem necessary, they should be eligible for a mortgage costing less than this amount. Of course it would need to be people who have not needed to resort to having housing benefit etc. but it is often the high cost of renting which renders it impossible for many people to save for the required deposit on a house. I was speaking to the manager of a bank/building society some months ago and he told me that they now no longer just look at income as it is but how people spend their money and whether or not they save regularly.

Nannyfrance Sun 22-Nov-15 10:38:41

I agree Luckygirl. I retired at 62 and seem to be working harder than ever now taking care of my elderly father who has Dementia and also
my grandchildren. Not only is this unpaid work but I have to dip into my pension to pay for transport to visit my Dad and collect the Grandchildren from school. I cannot claim carers allowance for taking care of my Dad because I receive a pension!

rosequartz Sun 22-Nov-15 16:43:41

On average public sector workers get a better deal than those working in the private sector (bankers are the exception as we all know) - and that's not fair

I do think that that is a more recent thing, though, because I remember years ago hearing about people who were retiring from industry on 2/3rds final salary pensions, after fewer years than the 40 years required for the civil service pension.
I don't know what the terms are nowadays for police pensions, but police officers I knew who were retiring 20 years ago were able to retire at age 48 after 30 years' service. I don't think public sector pensions were consistent then, I am not sure about nowadays.

rosequartz Sun 22-Nov-15 16:46:22

after fewer years than the 40 years required for the civil service pension. which paid half of final salary after 40 years. Of course, it is pro rata for the number of years' service - which of course related to more women than men, as women had traditionally taken years out to care for DC in those days.

rosequartz Sun 22-Nov-15 16:51:53

Many of us have managed to buy a house to live in due to much lower property values when we were young. Many of our kids and grandchildren won't be able to. And that's not fair.

We didn't push up the property prices - it is something out of our control.

Many of us have had no inherited wealth, or very little. It's not something anyone should expect, of course, but I do hope that my DC will be able to benefit from our good fortune of the increase in our property value. Unless the Government or care homes take it all.
And many older people have lent/given their DC the deposit for a property - sometimes re-mortgaging their homes to do so.

We're not all greedy and selfish.

annsixty Sun 22-Nov-15 16:52:21

Nannyfrance can your father claim Attendance Allowance so that he can recompense you for your time and your travel costs?

Judi123 Sun 22-Nov-15 17:47:34

I will get my state pension at 63yrs 11 months and 5 days.
I worked until April (age 62) this year then I gave up, literally.

There is no box to tick in car insurance for drop out, or any other form. I'm not collecting any benefits, my local authority pension will be £857 a YEAR when I'm 65.

15 years part time, AND because it was a contracted out pension scheme it affects my OAP pension so I will get day.

Meanwhile with less than £20,000 in the bank I continue to be thankful I don't have to work and I get by with savings.

rosequartz Sun 22-Nov-15 18:13:20

my local authority pension will be £857 a YEAR when I'm 65 shock

I regretted taking out a lump sum when I left Local Government after ten years full-time - however we needed the money at the time with a new baby on the way and no maternity allowance. I have often thought that it was the wrong decision, but perhaps it was the right one Judi123, especially if it was contracted out.

Are you sure you aren't entitled to benefits?

nannymoocow Sun 22-Nov-15 22:00:47

A founder of WASPI (women against State Pension Inequality) will be on BBC1 Breakfast tomorrow morning 23 November at 8.10am. Please watch, as this may be beneficial to some ladies in the on here.