The IMF is onto something – a sentence I’ve never uttered before. But that august institution says today’s 70-year-olds not only have the cognitive functions 53-year-olds had back in 2000, but are faster, stronger and more energetic than ever.
In other words, 70 isn’t really old anymore. Ergo, says the IMF, a little self-servingly, we should carry on working until at least then, rather than calling it a day at 66, as we do in the UK, and receiving a triple-locked pension that costs a fortune. If there’s one big drag on economic growth, this is it, not just in the UK but around the western world.
At around £125 billion a year, state pensions are responsible for a staggering 10 per cent or so of all government expenditure
Harsh as it sounds, it makes sense. At around £125 billion a year, state pensions are responsible for a staggering 10 per cent or so of all UK government expenditure. And that’s a figure that will only grow as people live longer. It’s already much bigger than the education budget, and is only dwarfed by the health budget, which itself, for obvious reasons, mainly benefits older people.
If I’m still around in 2050, I’ll be one of eight million Brits over the age of 80. There are already three million. And whereas one in six people are currently aged 65 or more, by 2050 one in four of us will be. So, unless something changes rapidly, we oldies will be grabbing unaffordable, wrinkly fistfuls of cash from the exchequer each minute of each day.
If we want someone to thank for all this, we need to start with Otto von Bismarck, who introduced the old age pension in the late 1880s to give a bit of help to the tiny minority of Germans who reached 70 (then a grand old age, probably the equivalent of about 95 now). Those few recipients used it for just a couple of years or so before dying.
Fast forward 150 years and the whole thing has mushroomed. The UK’s average age of death is 82, which means a typical person will receive the state pension for 16 years. In France, they retire even younger, at 62, and sometimes live off the state for a further three decades.
We clearly need a recalibration, starting with our perception of what counts as ‘old’. I’m in my mid-late 50s but feel about 30. Retirement, in the conventional sense, is unthinkable. I hope I’ve got a good two decades of productive work in me, health permitting. So why on earth am I classed as ‘late middle-aged’, and old enough that in less than a decade I’ll be deemed worthy of government support?
Okay, I look at some folk my age, or younger, and they do seem more decrepit. But many others are gallivanting around the world, running half marathons, parachuting out of light aeroplanes, dating people half their age and dancing the night away. One of my friends is about to propel himself along the entire length of the Monmouthshire and Brecon Canal (36 miles) in a single day on a stand-up paddleboard. Yet he’ll be eligible for a bus pass in four years’ time.
And it’s not like we’ve lived a life of abstinence and monastic virtue. I certainly haven’t, nor has he. But we just don’t feel all that ancient. In fact, that’s one of the reasons I’ve grown a beard, with a helpful bit of grey in it, so when I turn up at business meetings, clients realise they’re dealing with someone who’s been around the block a few times, and not the office junior.
Yet so many of my friends and contacts have retired, or semi-retired, still in their 50s, purely because there’s little incentive to work. Why bother slaving away just to give nearly half of it, in many cases, to the government? Especially now Rachel Reeves has decided that pensions will no longer be free of inheritance tax. It sounds to me like she’s screwed up. There again she’s far cleverer than I am (it says so on her CV) so I might be missing something.
But here’s what I’d do. First, classify middle age as starting at 45 and ending at nearer 70. Raise the retirement age bit by bit, with the eventual target of its kicking in about ten years before the average age of death. Reverse Reeves’s awful decision about inheritance tax. Tackle fiscal drag, so that the higher rate applies only to the genuinely affluent. Hammer home the message that we must all try to save for our retirement rather than expecting a shrinking number of younger people to fund the entire dotage of millions of oldies.
Finally, update the adage that ‘life begins at 40’. These days, 60 is more realistic starting point. Which also gives me a few more years to buy a paddleboard and head for Monmouthshire.
Comments