Ross Altman says raising the state retirement age to 71 would be a hard blow to the poor and sick
Ross Altman: Only the top 10 per cent of the UK population stay healthy until their early 70s
the The state retirement 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 Ross Altman, a long-time campaigner for older people’s rights who now sits in the House of Lords, says the proposal would penalize the majority of workers.
Raising the state retirement age to 71 by 2040 is unreasonable. It would plunge more people into poverty later in life.
Anyone in their early 50s or younger will be surprised by this suggestion from the International Longevity Center.
The rise in the state retirement age to 66 has already increased hardship, especially for those who do not have access to good private pensions and who are often in poor health.
Only the top 10 per cent of the UK population maintain their health until their early 70s. Therefore, social policy must recognize that the majority of the population is not healthy by their mid-60s.
Office for National Statistics figures show that 40 per cent of men and women on low incomes remain healthy on average until around the age of 61 or 62.
Reducing state pension costs by making unhealthy workers wait longer is to the advantage of high-wage pensioners.
It would increasingly skew state pension spending toward wealthy older people who tend to live longer, while penalizing the majority of the population.
If people are healthy and wealthy enough to postpone receiving the state pension, they could actually choose to do so in exchange for higher payments.
Disadvantaging middle- and low-income social groups is not the way to run a fair social welfare system.
Workers pay large amounts for their state pensions
State pension age: Think about other ways to save money, which helps ensure greater fairness and flexibility, says Lady Altman
The state pension is part of the social contract for every worker. They and their employer have to pay large amounts of National Insurance in order to secure themselves for the basic minimum state pension support in the future when they are unable to work.
This is the social deal. The state pension remains the bedrock of social support, and chronological age is not a fair determinant to use in making cost-cutting decisions, due to individual differences.
Private pension coverage remains too uneven to support an increase in the state retirement age simply because life expectancy is rising.
Despite the government spending more than £70 billion a year on tax credits, National Insurance for private pensions and auto-enrolment – a major success so far in increasing workplace private pension coverage – millions of people still receive too little private pension provision. Or they don’t get it at all.
Those in their early 50s or younger will not necessarily have the time to ensure that a private pension can bridge the gap between having to stop working and receiving state pension income.
The government must look at other ways to save money, which will help ensure greater fairness and flexibility. Health conditions and the duration of the National Insurance Register may be taken into account.
Focus on preventing ill health and combating age discrimination
There are huge disparities in health across the country.
Until the government improves the NHS’s preventative health measures so that the service becomes more focused on keeping people healthy for longer, simply continuing to increase the starting age for state pensions will leave increasing numbers of people over 60 In general, they are at risk of being forced to work. Despite ill health, or living on the breadline.
The UK job market is not ready for this either 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 continue to face ageism in the workplace and are often stereotyped as being old or close to retirement, so they are “managed” or ignored. For on-the-job training. And ignored in hiring.
While over-60s still face discrimination in the workplace, forcing them all to wait longer for their state pension to kick in puts them at risk of unemployment.
Encouraging more part-time work before full retirement could ease state pension cost pressures.
There must also be greater flexibility for early pension payments for those who cannot actually work.
Changing the rules of the National Insurance Register
Longer working lives can be profitable for individuals, society and the economy, enhancing growth, income and pensions. However, simply looking at the rise in life expectancy to determine the starting age for the State Pension is quite brutal.
Increasing the number of National Insurance years needed to obtain a full state pension could reduce costs and recognize societal differences.
Only 35 years of National Insurance are currently needed, and that is certainly not a full working life in the 21st century.
Those who started working at age 16 would have been over 50 by their late 60s.
The government will work to reduce costs, for example, by requiring 45 years to receive a full state pension instead of just 35 years.
This rewards those who have paid extra years and improves sustainability, social equity and affordability – as opposed to simply raising the state retirement age to 71.
Reducing the criteria for obtaining the pension balance
Pension credit rules should also be relaxed. The starting age for Pension Credit – the additional means-tested amount for people over state pension age whose income is insufficient to avoid poverty – has risen in line with the state pension age itself.
Eligibility criteria have also been tightened so that fewer people are eligible, for example those whose spouses are still under the state pension age.
At the very least, policymakers should consider relaxing pension credit rules to allow means-tested support from an early age.
Until now, increases in the state pension age have meant that 60-year-olds who are the least healthy and on the lowest incomes have been overlooked by policymakers and cannot even access reduced early ill-health payments.
It is not comfortable for those who are seriously ill to work, knowing that they may get more as they reach an increasingly higher age. Many may not survive that long, or may fall into poverty in the meantime.
Government 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 depriving less well-off groups of important social care support.
Some links in this article may be affiliate links. If you click on them we may earn a small commission. This helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to influence our editorial independence.
(tags for translation) Daily Mail