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Ros Altmann: Only the top 10 percent of the UK population stay healthy into their 70s
The state pension age may have to be raised radically or there may be too few workers left to support retirees, an influential think tank has warned.
Former Pensions Minister Ros Altmann, a veteran campaigner for older people’s rights and now a member of the House of Lords, says the proposal would penalize most workers.
Raising the state pension age to 71 by 2040 is unacceptable. It would plunge more people into poverty in old age.
Anyone 50 years old or younger would be caught by this proposal from the International Longevity Center.
Raising the state pension age to 66 has already caused greater difficulties, particularly for those who do not have good private pensions and who are often in poorer health.
Only the top 10 per cent of the UK population stay healthy into their 70s. Therefore, social policy must recognize that the majority of the population is not well when they reach 60 years of age.
Figures from the Office for National Statistics show that 40 per cent of men and women on the lowest incomes only stay healthy on average until they are 61 or 62 years old.
Reducing state pension costs by making sick workers wait longer benefits well-pensioned, higher-paid people.
It would increasingly skew state pension spending towards wealthy older people who tend to live longer, while penalizing the majority of the population.
If people are healthy and wealthy enough to defer receiving the state pension, they can now choose to do so in exchange for higher payments.
Disadvantaging more middle- and low-income social groups is not the way to administer an equitable social welfare system.
State pension age: consider other ways to save money that help ensure greater equity and flexibility, says Lady Altmann
Workers pay large sums of money towards their own state pensions
The state pension is part of the social contract of every worker. They and their employers have to pay significant sums to Social Security in order to be able to secure the basic minimum state pension in the future when they cannot work.
That is the social treatment. The state pension remains the basis of social support and chronological age is not a fair determinant for cost reduction decisions, due to individual differences.
Private pension coverage remains too unequal to support raising the state retirement age just because “average” life expectancy is increasing.
Despite the Government spending more than £70bn a year on tax and National Insurance relief for private pensions and self-enrolment (so far a huge success in increasing private pension coverage in the workplace), Millions of people still have little or no private pension provision.
Those in their early 50s or younger will not necessarily have time to ensure that a private pension can bridge the gap between having to stop working and receiving state pension income.
The Government should consider other ways to save money, which help ensure greater equity and flexibility. Health conditions and the duration of National Insurance registration may be considered.
Focus on preventing disease and combating age discrimination
There are big differences in health across the country.
Until the Government manages to improve NHS preventative health measures so that the service is more focused on keeping people healthy for longer, continuing to raise the starting age for state pensions will leave an increasing number of people aged 60 and so many years at risk of being forced to work. despite having poor health or living in misery.
The UK labor market is also not prepared for this due to age discrimination. The government is trying to encourage and enable longer working lives, but there is still a long way to go.
It should help more employers retain, retrain and hire older workers, who still face age discrimination in the workplace and are too often stereotyped as too old or close to retirement, so they are “opted out.” ” or ignored during on-the-job training. and ignored in recruiting.
While people in their 60s still face discrimination in the workplace, forcing them all to wait longer for their state pension to start leaves them at risk of unemployment.
Encouraging more part-time work before full retirement could ease pressures on state pension costs.
There also needs to be more flexibility to make early pension payments to those who truly cannot work.
Change National Insurance registration rules
A longer working life can be beneficial for individuals, society and the economy, boosting growth, incomes and pensions. However, simply considering the increase in average life expectancy to decide the starting age of the state pension is too brutal.
Increasing the number of years of National Insurance needed to obtain a full state pension could reduce costs and recognize social differences.
Currently only 35 years of National Insurance is needed and this is certainly not a fulfilling working life in the 21st century.
Those who started working at age 16 could have accumulated more than 50 years by the time they reached age 60.
The Government would reduce costs, for example, by requiring 45 years to receive a full state pension instead of just 35.
This rewards those who have paid for longer and improves sustainability, social equity and affordability, as opposed to simply raising the state pension age to 71.
Make the criteria for receiving pension credit more flexible
Rules on pension credits should also be made more flexible. The starting age for pension credit – which is the means-tested top-up for people over state pension age whose income is inadequate to avoid poverty – has risen in line with the state pension age itself .
In addition, the qualification criteria have been tightened so that fewer people qualify, for example those whose spouses have not yet reached state pension age.
At a minimum, authorities should consider relaxing pension credit rules to allow means-tested support from an earlier age.
Until now, increases in the state pension age mean that the least healthy and lowest-income people in their sixties have been neglected by policymakers and cannot even receive reduced sick pay early. .
For those who are too sick to work, it is no comfort to know that they will be able to earn more as they reach an increasingly older age. Many may not live as long or may be pushed into poverty in the meantime.
State pension policy is a political choice. With the lowest state pension in the developed world, affordability is not a deciding factor – the decision is where to prioritize spending.
Older people deserve fairer retirement support and the costs could come from other reforms, rather than simply taking away crucial social support from less well-off groups.
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