A well-aged idea

Geoff Wyatt

Women retire later than men then?

Sally Chatterjee

An interesting idea, for ever-rising life expectancy is diluting pension returns.

But at the same time, as a society gets richer, it should have more wealth to spend on pensions. So what about adding a multiple to account for rising GDP or a similar component?

Simon Stephenson

Well James, I've been arguing this one for at least 20 years, so it's nice to see that someone else has caught on.

Sixty-five was chosen because back in those days health was not what it is today, and many people by that age had become too decrepit to work efficiently. The concept was at least as much about making the work-force more efficient as about rewarding people in their old age for having lived a productive life. The cost of the pensions paid in lieu of wages was expected largely to be covered by increased productivity.

Well this argument no longer holds water, which is a firm reason to avoid setting arbitrary rules in fluid situations. The NHS mantra of "free at the point of use" is another one. Still, they won't be told, and I don't suppose they ever will.

oldtimer

The Economist is right, of course. The pension issue is an exploding time bomb - just look at the pension component in council tax and police authority charges. As for central government - look away now!

At the moment I benefit from a mix of pensions earned from various sources. One of these has already run out of funds to support indexation and is now a fixed annual sum. Another has always been fixed. I await the day when the remaining indexed pension gives up the ghost - it is presently in substantial deficit, thanks mainly to Mr Brown`s tax on pension investment income. In consequence I am saving what I can against the day when that pension fund goes belly up.

For the younger generation the problem of indexation of the pensionable age means constantly moving goal posts. This could be dispiriting but it surely must come.

My advice to my own family is to keep debt low and to build savings both to help educate their children and provide for their own retirements. If you cannot afford it just go without.

John Page

The article has elicited some cracking comments on The Economist's site :)

euSSR GO HOME

Just one more scheme for depriving contributors of the benefits they were promised. If it happens, then I'd suggest that the young refuse to pay into the scheme at all - they won't get theirs either!!!

So much for investing in one's country!!! [And no, the euSSR won't make the chances bigger and better!!!!!!!]

dearieme

It'll certainly lead to the misreporting of life expectancy.

PSJ

I was actually just thinking about this today, before reading the Economist's article. Somebody told me that 65 was chosen by Bismark when he set up the German welfare system because it was one year more than the life expectancy of the day. So it seems sensible to delay receiving pensions accordingly.

How about for every two years life expectancy rises, pensions are delayed by a year? Sharing the proceeds of health ...

Ben Elford

I wonder if it would be only younger people who would see the goal posts constantly moving: wouldn't the same apply to older people, unless and until there were a mechanism to lock the age of retirement at a certain stage in a person's career?

And would we see different life expectancies specified for different people in different parts of the UK (working class men in Glasgow, middle class women in Surrey)?

JohnAnt

OK, and it would certainly make pension schemes affordable again: but then don't discriminate against older people in the workplace.
Have a look round the West End - thirty years ago it was a mix of all ages; now you scarcely ever see a worker over 45.
And that in turn will negatively affect unemployment among young graduates, as entry will be more restricted.
Not as easy as it sounds.

Bureaucrats R Us

Whose longevity? Measured as by Surrey or Glasgow? You won't get any trade unions representing manual workers supporting this: it's the obverse - only regressive - of the periodically-touted insuance company proposal to base annuity rates on postcodes, with the wealthiest (and therefore longest-lived) paying most.

strapworld

Life expectancy of the individual or using percentages?

There was a doctor employed by the city of london police who was nicknamed dr.death.

prior to their retirement officers wouyld consult him to ascertain if they should take the full pension or commute part of it for a lump sum.

The Doctor would examine them and tell them, almost to the day when they would join the Heavenly Constabulary!!

But I think the retirement age should be raised to seventy five for men and eighty for women.

Scholars should leave school at aged 18 and immediately ALL of them spend three years National Service in the military.

Move all retired people to a specially designed holiday camp so that they can spend the rest of their lives enjoying themselves.

Redvers

One objection strikes me at once.

In general the poor are more unhealthy, and will die younger. This bright idea will ensure that many of the poorest in society will die before they retire.

Tis may not be such a problem in Denmark but in the UK, where there is a huge underclass of people living in poverty, the consequences would be appalling.

Aidan

This article is about five years out of date. We don't have a fixed minimum pension age in this country, except for the state pension. People are free to start drawing their private sector pensions at any age between 55 and 75, depending on the rules of the pension scheme. And we have age discrimination laws which make a mandatory retirement age illegal in the private sector.

I don't often agree with this Government, but to me this is the right approach. People should be free to decide when they retire and start drawing their pensions, provided they understand the difficult judgement they are making. In simple terms, the earlier you retire the smaller your pension, but the more time you have to enjoy it. By retiring later you may have a bigger pension but you will certainly have less time to enjoy it.

The Preston Park Panther

Redundant at age 40. Pension at age 80. 40 years on the dole!

GJTory

PSJ - actually I believe that life expectancy when Bismarck set up his scheme was only 52.

The Germans had no intention of paying much money through this scheme.

I actually think that we should do away with the state pension over time. There is no good reason why the state (ie the rest of us) should pay for someone to stop working at some arbitrary age. If you want to stop working then you should save up to do it.

If you want your income to keep rising at the same rate as earnings then go out, work and earn money. Then you're income will certainly rise in line with earnings. This is really the only socially just way of doing things. Otherwise you allow one group of people (ie old people) to be a burden on the rest of us.

The only money available should be for those who become incapable of work - incapacity benefit.

Of course the transition to this would take a long time if you, say, raised the retirement age by 1 year every 3 years starting in 2015. We should do that anyway because 65 is too low as a state pension age. The only difference with my suggestion is that you would never stop raising the state pension age.

John Levett

We already have too big a potential workforce: increasing it at the upper age level will result in higher costs managing the younger population.

We already have sufficient Health and Safety wallahs, quangos for making up statistics, bureaucrats, snoopers, CCTV operatives and even a Minister for Climate Change: we don't need any more non-jobs.

It is time to accept that real jobs are in short supply. This country is already a social disaster area and until we get round to rationing work, adding to the jobless figures to save a few pension pounds is a recipe for more of the same.

Jez

We need to do it here.

(no lie) Today my colleague, with 45-50 years experience in our field has *HAD* to retire. This guy has been a regular contact for myself as his knowledge has been priceless in the past 3 years.

He doesn't want to go.

The contribution he would make generating money and paying tax would easily outweigh having to retire right now- as an opinion.

Contrary to euSSR GO HOME's opinion, a two-way pro-active benifits/incentive scheme should be adopted by the government to utilise this untapped resource.

We can't afford to shed any more of this countries assets.

(I'm no EU junky btw- at all)

Pete

@euSSR GO HOME

"If it happens, then I'd suggest that the young refuse to pay into the scheme at all"

Not a good idea! - As there is no element of investment, current state pensions are paid from current contributions...

se1man

Imagine the debates we'll have amongst (especially public sector) workers from various parts of the country... Would a policeman retire earlier in Glasgow or Liverpool than in Surrey or Dorset? Might we see lots of migration of the work-shy middle-aged from one part of the country to another?
Localism in action!

Marcus Cotswell

@ John Levett (10:09am), er, no, we don't, one of the biggest problems we face as a society is that the dependency ratio [(children + pensioners) / people of working age] is rising rapidly. We desperately need to increase the number of older people continuing to work later in life.
the issue about raisign the state pension age is a purely fiscal one - it reduces the liabilities of the taxpayer. But if we are going to address the issue in a sustainable way we need to look in the round at policies which are designed to smooth the economy's adaptation to an ageing workforce.

Peter Wimberley

The Pension age should be abolished and people able to work on as long as they and their employers wish it. The Pension itself should become available at 65 now for both sexes and increase year by year as life expectancy increases. Common sense, surely

abraham

Just throw old people into a big oven at 65, and use their ashes as fertiliser.

Tiberius

I remember Bill Jamieson explaining how Chile had devised a retirement income model, which was the closest to successfully privatising the industry. If I remember rightly, everyone was given a lump sum by the state to start off a private scheme, with taxpayer future liability reduced or removed. Of course with the state of our public finances, that is probably off the agenda.

But there is one thing everyone should check now. If you have opted out of SERPS, it is almost certainly better to opt back in.

Sir Graphus

It appears that "Logan's Run" has the only workable solution to the pensions problem.

And Jenny Agutter, too!

donald fraser

The demographic time-bomb is not simply caused by more people living longer and being healthier, it is also caused by poor birth rates. There is no direct reason that an inverse population pyramid ever needed to arise as a result of medical science helping people live longer. Feminism, contraception, laws preventing discrimination in favour of working men with families to support, reduced perception of employment stability amongst men and a host of other factors are completely independent of the better medicine and healthier lifestyles which extends old age. Unless low birth rates are seen as the root demographic problem to tackle, tinkering with retirement ages may unintentionally worsen the situation.

There are many possible ways two independent trends are related. But before the weights can be separately calculated, the target of “more children to be had by younger couples” needs some qualification. Otherwise it is a recipe for boosting the birth rates only amongst those that are on the margins of what British society is. Those might be more children from single mums, immigrants from Eastern Europe or religious groups that oppress that the core feminist values that have led to this decline in the first place. Is the incidence of low birth rates most prevalent amongst those where there exist generations above them “past child-rearing age” with much greater lifestyle expectations? How does this “crowd out” the younger generations? There are social, economic and political reasons why a “top-heavy” aged society might be influencing younger generations to avoid the commitment and maturity which starting a “planned family” requires.

As we are accustomed to live in a “free society” with little central planning, most political policies towards the social engineering of birth rates seems unattractive. Therefore we are more likely to pursue policies to lessen the consequences of an aged society and avoid tackling the harder political issues at the root of declining birth rates. In the long term some of those solutions such as vastly increasing the number of East Europeans to care for our old and infirm, may become eventually politically unacceptable. The real debate on that will only begin much later. Namely once the 60s baby boom generation is all into retirement and the power of their vote outweighing all those of working age is fully understood. In the meantime it is never too late for those who are suggesting policies to cover this demographic transition phase over the next 10 to 15 years to consider carefully the secondary effect on birth rates each and every new policy will have.

David Ossitt

strapworld.

"Move all retired people to a specially designed holiday camp so that they can spend the rest of their lives enjoying themselves"

Would you call this a consentration camp?

abraham.

"Just throw old people into a big oven at 65, and use their ashes as fertiliser"

abraham; have you been talking to 'strapworld'?

You make an odd couple.

TGF UKIP

Better be careful you don't hand still more ammo to a future Labour government (if any there be) for yet more anti middle class and private sector discrimination.

In his laughingly called "Simplification" of pensions adventing in April 2006, Brown raised the age at which personal pension benefits could be taken from age 50 to 55. He also introduced a MINIMUM special tax charge of 70% of a pension funds value in the case of death after age 75 of a pensioner who has chosen to draw down income from his fund rather than hand his money over to an insurance company for an annuity. The 70% is in addition to IHT making a total of 82% tax which depending on the stance of HMRC and the size of the fund etc could rise to 89.2%

Remember the instinct of the Treasury and the Revenue is to screw the middle classes and private sector whenever they get their chance - and if you think you can depend on Dave and Co to be any different - think again. The Tory Party that was, ain't any more.

The Masked Marvel

How is this supposed to work? One flat life expectancy rate for the whole country? Or will people in certain areas of Glasgow get to retire a bit earlier than somebody in Kent?

Douglas R. Chandler

Well a person may live longer but in what physical and mental condition? Will they be able to work until they hit the new age qualification? "Oh, he can't stay on his feet for more than an hour, put the old blind bastard to running the crane then."

euSSR GO HOME

All right - I'd like to clarify:

I don't think people should be forced to retire. I'm moving to the US so that I can continue working. I believe that a capable and qualified person, with faculties intact, who needs money to live on (the pension helps, but not much), should be allowed to contribute to society for as long as possible.

Staring at the walls and falling into depression and degeneration shouldn't be the option - 'ovens,' camps, - [and/or hospitals or nursing homes] might even be better than that!

However, many young people seem to think these should be the options - hit the date and you're out. So: Caught your head on the car door because you're rushing away from harassment? Suffered a detachment of the vitreous gel? Oh, Diddums. Hey, pay attention to what that hospital nurse tells you: "You shouldn't expect anything else at your age. We don't treat that; just live with it!" And the doctor - who hails from God knows where in euroland? He just sits and laughs in your face: "It's come clean away!"

David O - I don't think the young should stop paying into the system NOW. However, if the goalposts start moving, then they have no reason to assume that the playing field won't turn Alpine as well!

Another thought - how many of our precious illegals and foreigners evade contributing? I wonder.