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Old 04-03-2017, 02:33 PM
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Mary Pat Campbell
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A world without retirement

We are entering the age of no retirement. The journey into that chilling reality is not a long one: the first generation who will experience it are now in their 40s and 50s. They grew up assuming they could expect the kind of retirement their parents enjoyed – stopping work in their mid-60s on a generous income, with time and good health enough to fulfil long-held dreams. For them, it may already be too late to make the changes necessary to retire at all.

In 2010, British women got their state pension at 60 and men got theirs at 65. By October 2020, both sexes will have to wait until they are 66. By 2028, the age will rise again, to 67. And the creep will continue. By the early 2060s, people will still be working in their 70s, but according to research, we will all need to keep working into our 80s if we want to enjoy the same standard of retirement as our parents.

This is what a world without retirement looks like. Workers will be unable to down tools, even when they can barely hold them with hands gnarled by age-related arthritis. The raising of the state retirement age will create a new social inequality. Those living in areas in which the average life expectancy is lower than the state retirement age (south-east England has the highest average life expectancy, Scotland the lowest) will subsidise those better off by dying before they can claim the pension they have contributed to throughout their lives. In other words, wealthier people become beneficiaries of what remains of the welfare state.

Retirement is likely to be sustained in recognisable form in the short and medium term. Looming on the horizon, however, is a complete dismantling of this safety net.

For those of pensionable age who cannot afford to retire, but cannot continue working – because of poor health, or ageing parents who need care, or because potential employers would rather hire younger workers – the great progress Britain has made in tackling poverty among the elderly over the last two decades will be reversed. This group is liable to suffer the sort of widespread poverty not seen in Britain for 30 to 40 years.
A series of factors has contributed to this situation: increased life expectancy, woeful pension planning by successive governments, the end of the final-salary pension scheme (in which people got two-thirds of their final salary as a pension) and our own failure to save.

In 2014, the average age of the UK population exceeded 40 for the first time – up from 33.9 in 1974. In little more than a decade, half of the country’s population will be aged over 50. This will transform Britain – and it is no mere blip; the trend will continue as life expectancy increases. This year marked a demographic turning point in the UK. As the baby-boom generation (now aged between 53 and 71) entered retirement, for the first time since the early 1980s there were more people either too old or too young to work than there were of working age.

The number of people in the UK aged 85 or more is expected to more than double in the next 25 years. By 2040, nearly one in seven Britons will be over 75. Half of all children born in the UK are predicted to live to 103. Some 10 million of us currently alive in the UK (and 130 million throughout Europe) are likely to live past the age of 100.

The challenges are considerable. The tax imbalance that comes with an ageing population, whose tax contribution falls far short of their use of services, will rise to £15bn a year by 2060. Covering this gap will cost the equivalent of a 4p income tax rise for the working-age population.

It is easy to see why governments might regard raising the state retirement age as a way to cover the cost of an ageing population. A successful pursuit of full employment of people into their late 60s could maintain the ratio of workers to non-workers for many decades to come. And were the employment rate for older workers to match that of the 30-40 age group, the additional tax payments could be as much as £88.4bn. According to PwC’s Golden Age Index, had our employment rates for those aged 55 years and older been as high as those in Sweden between 2003 and 2013, UK national GDP would have been £105bn – or 5.8% – higher.

There are, of course, problems to this approach. Those who can happily work into their 70s and beyond are likely to be the privileged few: the highly educated elite who haven’t spent their working lives in jobs that negatively affect their health. If the state pension age is pushed further away, for those with failing health, family responsibilities or no jobs, life will become very difficult.

Retirement is an ancient concept. It caused one of the worst military disasters ever faced by the Roman empire when, in AD14, the imperial power increased the retirement age and decreased the pensions of its legionaries, causing mutiny in Pannonia and Germany. The ringleaders were rounded up and disposed of, but the institution remains so highly prized that any threat to its continued existence is liable to cause mutiny. “Retirement has been stolen. You can pay in as much as you like. They will never pay back. Time for a grey revolution,” one reader emailed.

It was in 1881 that the German chancellor, Otto von Bismarck, made a radical speech to the Reichstag, calling for government-run financial support for those aged over 70 who were “disabled from work by age and invalidity”.

The scheme wasn’t the socialist ideal it is sometimes assumed to be: Bismarck was actually advocating a disability pension, not a retirement pension as we understand it today. Besides, the retirement age he recommended just about aligned with average life expectancy in Germany at that time. Bismarck did, however, have a further vision that was genuinely too radical for his era: he proposed a pension that could be drawn at any age, if the contributor was judged unfit for work. Those drawing it earlier would receive a lower amount.

In 2006, it became legal for employers to force their workers to retire at the age of 65. A campaign led by Age Concern and Help the Aged was swift and effective in its argument that the new default retirement age law broke EU rules and gave employers too much leeway to justify direct discrimination on the grounds of age. On 1 October 2011, the law was overturned.

Since then, Britain’s workforce has greyed almost before our eyes: in the last 15 years, the number of working people aged 50-64 has increased by 60% to 8 million (far greater than the increase in the population of people over 50). The proportion of people aged 70-74 in employment, meanwhile, has almost doubled in the past 10 years. This trend will continue. By 2020, one-third of the workforce will be over 50.

The proportional increase may be substantial, but it charts growth from a low level. In empirical terms, the impact is less positive: almost one-third of people in the UK aged 50-64 are not working. In fact, a greater number are becoming jobless than finding employment: almost 40% of employment and support allowance claimants are over 50, an indication that many older people are unable to easily find new and sustainable work.

This is unsustainable: by 2020, an estimated 12.5m jobs will become vacant as a result of older people leaving the workforce. Yet there will only be 7 million younger people to fill them. If we can no longer rely on immigration to fill the gaps, employers will have to shed their prejudices, workplaces will have to be adapted, and social services will have to step in to provide the care that ageing people can no longer give their grandchildren, ageing spouses or parents if they remain in the workforce.


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