Raising the state pension age to 71 would be a hard blow to poor and sick people, says ROS ALTMANN
Ros Altmann: Only the top 10 percent of the British population will remain healthy until the early 1970s
The state pension age would have to rise radically, otherwise there would be too few workers left to support retirees, an influential think tank has warned.
Former Pensions Minister Ros Altmann, a long-time campaigner for the rights of older people who now sits in the House of Lords, says the proposal would punish the majority of workers.
Raising the state pension age to 71 in 2040 is unconscionable. It would push more people into poverty later in life.
Anyone in their early 50s and younger would be affected by this proposal from the International Longevity Center.
The increase in the state pension age to 66 has already led to greater problems, especially for people without good private pensions who are often in poorer health.
Only the top 10 percent of the British population will remain healthy until the early 1970s. Therefore, social policy must recognize that the majority of the population is not doing well by their mid-60s.
Figures from the Office for National Statistics show that the 40 percent of men and women on the lowest incomes only remain healthy on average until around the age of 61 or 62.
Lowering the cost of state pensions by making sick workers wait longer benefits well-retired, better-paid people.
It would increasingly direct state pension spending towards affluent older people, who tend to live longer, while disadvantaging the majority of the population.
If people are healthy and wealthy enough to postpone their state pension, they can already choose to do so in exchange for higher benefits.
Disadvantaging more middle and lower income social groups is not the way to run a fair social security system.
Employees pay large amounts for their own state pensions
State pension age: Consider other ways to save money that will contribute to greater fairness and flexibility, says Lady Altmann
The state pension is part of the social contract of every employee. They and their employer have to pay significant amounts into national insurance to insure themselves for minimum basic pension support in the future once they can no longer work.
That is the social agreement. The state pension is still the basis of social support and chronological age is not a fair determinant when making decisions about cost savings, due to individual differences.
Private pension coverage is still too uneven to support an increase in the state pension age just because ‘average’ life expectancy is increasing.
Despite the government spending over £70 billion a year on tax and welfare cuts for private pensions and auto-enrolment – a major success so far in increasing private pension coverage in the workplace – millions of people still have little or no private pension provisions.
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 a state pension income.
The government should consider other ways to save money that contribute to greater fairness and flexibility. Health status and length of national insurance record may be taken into account.
Focus on preventing ill health and combating age discrimination
There are major health disparities across the country.
Until the Government manages to improve the NHS’s preventive health measures so that the service becomes one more focused on keeping people healthier for longer, continuing to raise the starting age for state pensions will leave more and more over-60s at risk to be forced to work. despite poor health, or living on the breadline.
The British 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 recruit older workers, who still face ageism in the workplace and are too often stereotyped as too old or about to retire, leaving them being ‘shunned’ or overlooked for on-the-job training. and ignored in recruitment.
While people over 60 still face discrimination in the workplace, they are at risk of unemployment if they all have to wait longer for their state pension to start.
Encouraging more part-time work before full retirement could ease pressure on state pension costs.
There should also be more flexibility to make early pension payments to those who really cannot work.
Change the registration rules for national insurance
A longer working life can be a win-win for individuals, society and the economy, boosting growth, incomes and pensions. However, it is too cruel to simply consider the increase in average life expectancy to determine the state pension age.
Increasing the number of years of National Insurance required for a full state pension could reduce costs and recognize social differences.
Only 35 years of National Insurance are currently required and this is certainly not a full working life in the 21st century.
Those who started working at age 16 could have built up more than 50 years of employment by their late 60s.
The government would reduce costs by, for example, requiring 45 years for a full state pension instead of just 35 years.
This rewards those who have paid longer and improves sustainability, social justice and affordability – unlike raising the state pension age to 71.
Relax the criteria for receiving pension credits
The rules for pension credits should also be relaxed. The starting age for pension credit – the income-related supplement for people above the state pension age whose income is insufficient to prevent poverty – has increased in line with the state pension age itself.
The qualification criteria have also been tightened, so that fewer people are eligible, for example people with spouses who have not yet reached state pension age.
At the very least, policymakers should consider relaxing the rules on pension credits to allow means-tested support from a younger age.
So far, the increase in the state pension age means that people over 60, who are the least healthy and have the lowest incomes, have been neglected by policymakers and cannot even receive a lower benefit for their health care benefits sooner.
It is hardly a comfort to those who are too sick to work to know that they will receive more as they reach older and older years. Many may not live that long, or may fall 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 about where to prioritize spending.
Older people deserve fairer pension support, and the costs could come from other reforms, rather than just taking away crucial social support from less affluent groups.
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