From Ros Altmann:economist and pensions,
    investment and retirement policy expert

  • pensionsandsavings.com

    Increasing State Pension Age to 75 would be an outrage

    Increasing State Pension Age to 75 would be an outrage

    • Increasing State Pension Age to 70 and then 75 would be wrong.
    • Strict chronological age cut-off ignores the 19-year gap in healthy life expectancy across UK. 
    • Saving public money is all well and good, but not by penalising the poorest and most vulnerable.
    • Working longer can be good for health and wealth but it should be a choice, not forced labour.
    • More flexibility is needed for earlier pensions for people in poor health and unpaid carers.
    • UK already has the lowest state pension in the developed world so how can it be unaffordable?

    The Centre For Social Justice has just released an astonishing policy paper, proposing to increase the State Pension Age dramatically – to 70 by 2028 and then to 75 a few years later. Apart from the fact that we are already seeing problems as women’s State Pension Age has risen sharply, and further increases for men and women are already underway, these proposals would create significant social ‘injustice’.

    Forcing everyone to wait longer for State Pension on basis of average life expectancy is unjust: Stark pension age rises would create significant hardship for many Britons. Such misguided policy proposals suggest little understanding of the role and impact of State Pensions and the differentials within our society.

    Variation in healthy life expectancy across the country is 19 years: Those who have had heavy manual labour careers, the less well-off or people with poor health might never receive their State Pension, even though they contributed National Insurance for decades. Current State Pension policy fails to recognise that those in the most deprived areas tend to die younger and on average spend 19 more years in poor health in old age than people in the least deprived parts of the country. Raising the pension age further still, will create even greater injustice, causing unwarranted hardship for the most vulnerable older people.

    It is rare that I see a proposal which is so damaging in terms of both policy and politics: This flawed policy thinking needs to be dismissed immediately, before it has any chance of being adopted by politicians looking for seemingly easy benefits. In any case, such proposals would be politically disastrous. Indeed, I believe, they would have damaging effects similar to the dreadful Manifesto proposals for social care reform which helped the Government lose its majority at the 2017 General Election.

    Yes, working longer can be beneficial for many people’s health and wellbeing, but not all: A significant minority of the population, many of whom have had hard physical manual labour careers, are simply not well enough to carry on. And those who leave work to care for loved ones should not be expected to wait so many more years. Either they, or those who need their care, will suffer. Policy should be about encouraging longer working life, not callously forcing it on people who cannot cope.

    Yes, keeping more older people in work can boost the economy and cut public spending, but it should be their choice: Official estimates suggest that an increase of just one year in the average age at which older people retire would add 1% to National Output (GDP). And increasing the State Pension Age would save significant sums in benefit spending as the population ages. But just forcing people to wait longer for their pension, regardless of their circumstances, is not a socially equitable welfare policy, nor does it accord with the principles of a basic State Pension to offer support to people who have paid contributions for their working life. Boosting growth and cutting spending on the backs of would-be pensioners is wrong. Indeed, major State Pension Reform in 2016 was supposed to have made State Pensions affordable for the long-term.

    More than 1 million over-50s want to work but can’t find a job – let’s help them first: Age discrimination is still embedded in the labour market and currently over 1 million people below state pension age cannot find a job. Increasing support for these citizens – with retraining programmes and employer incentives – should be the first priority. Only when work is readily available to all who want it before reaching current state pension ages, could further State Pension Age rises be considered. Leaving more people languishing on ‘in-work’ benefits, when they have no prospect of finding the work they need, or are being forced to carry on when they are not fit to do so, denies them the dignity and choice they deserve. Forcing people to work till they drop is not the mark of a civilised society – there must be room for choice.

    We need to get away from the idea that there is one ‘magic age’ beyond which people won’t be expected to work: Chronological age is not a sufficient defining characteristic for State Pension. Other factors should be used to determine eligibility, incorporating flexibility for individual differences in the qualification criteria.

    For example, cost could be controlled by number of years of contributions to National Insurance: To qualify for a full State Pension requires just 35 years of National Insurance. This is nowhere near a full working life. Many years of contributions seem to be wasted. Perhaps full State Pension should only paid to those with, say, 50 years on their record. And people should be able to start drawing a reduced pension on health grounds or to recognise unpaid caring roles. Allowing ongoing increases in State Pension for extra National Insurance years with no upper limit could also be considered, to help overcome the stark minimum age cut-off. Or perhaps as soon as someone has 50 years NI, they are entitled to a State Pension (regardless of chronological age), so those who started work earliest (usually the lower-paid) can retire earlier too, while those moving to the UK later in life would also get less.

    UK State Pension is lowest in developed world and discriminates on grounds of age and health: Our State Pension is not generous, it offers only basic minimum support. Indeed the OECD shows the UK pays the lowest of all OECD countries. Are we seriously suggested this country cannot afford this, even after reforms in 2016 that were said to make it sustainable. Making people wait longer and longer before they can receive any pension, compounds the current injustices whereby the system discriminates against those who have not attained a required age and can no longer work.

    Flexibility in State Pension is needed for those in poorest health: Currently, anyone healthy and wealthy enough to wait longer can achieve a higher state pension by delaying taking it. But those who are genuinely too ill to work cannot get a penny of their pension until they reach the constantly-rising minimum age. A more sensitive approach would be to ensure that people’s health, working life and caring responsibilities are taken into account and allow them access to State Pension from an earlier age.

    Raising State Pension Age also removes eligibility to other benefits: State pension age is a passport to other benefits, so increasing the age forces older people to wait longer for those too. Pension Credit, needed by the poorest pensioners, was paid from age 60 until recently, but the minimum age is now approaching 66, even though many over-60s are genuinely unable to work. They are forced onto Universal Credit, requiring them to undergo work assessment tests and apply for work, even if they cannot manage. Out of work benefits are much less generous than state pension, and are designed to encourage people into work. Once they are in the retirement age zone, however, this is more like forced labour than social support.

    Mismanagement of increases to Women’s State Pension Age shows how damaging it can be to keep raising pension ages: The DWP is particularly poor at communicating major changes in pension policy. This created enormous hardship for many women, who were never informed that they would not receive their State Pension at age 60. The ‘WASPI’ and ‘BackTo60’ campaigns highlight this. Such changes impact people’s lives and constant tinkering is damaging. Ideally, nobody should have an expectation of any specific age at which they stop work altogether. Just running pensions policy on the basis of averages is not appropriate in today’s Britain. Planning for part-time work and ongoing retraining through life will be important to help people work longer, but the inflexibility of a fixed pension age fails to cater for individual differences.

    (The CSJ Report is here: https://www.centreforsocialjustice.org.uk/library/ageing-confidently-supporting-an-ageing-workforce )

    2 thoughts on “Increasing State Pension Age to 75 would be an outrage

    1. I wholeheartedly agree with your thoughts on this matter I’m on a salary of just over £14,000 and have been trying to save as much as I can for Retirement at age 67. When I read about this I firstly cried for the best part of 2 days and I am now extremely angry. I was really pleased to read your thoughts and you are the first person who is putting into words the thoughts of the Country. Thanks so much for publicising this and being vocal in a time when others bury their heads in the sand.

    2. Where l used to work the trade unions asked the company, what is the effect on average of company pensioners life expectancy when early retirement is taken? The company would never supply the answer.
      Boeing in the US did supply figures which broadly showed for each year retirement taken before age 65 equated to a year longer life than those who retired at 65.

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