No pension until you’re 75 – is that what new report is really suggesting? By Tony Watts OBE

28th August 2019 by RetireEasy

Does new report signal the long-term thinking of the Conservative Party… or is this just an outlier to speed a more modest rise in the SPA? And how might the next generation of pensioners be affected?

A controversial new report from the Centre for Social Justice has achieved just what it intended to achieve: headlines.

Hardly surprising when the main conclusion is a proposal to raise the State Pension Age to 75 by 2035, and the chair of the self-described “independent thinktank” is Iain Duncan Smith – erstwhile Secretary of State for Work and Pensions, a man close to the heart of Government and (lest we forget) the one responsible for the (not entirely successful) introduction of Universal Credit.

Cue a fair degree of outrage – not helped by the fact that the report coincided within the release of data that showed the UK to currently have the highest rate of pension poverty in Western Europe.

So is there any good news?

Of course, there is a lot more nuance in the report than the headlines suggest, so let’s examine the other proposals. To quote directly: “This paper argues for significant improvements in the support for older workers.

“This includes improved healthcare support, increased access to flexible working, better opportunities for training, an employer-led mid-life MOT and the implementation of an ‘Age Confident’ scheme.

“As we prepare for the future, we must prioritise increasing the opportunity to work for this demographic to reduce involuntary worklessness. For the vulnerable and marginalised, a job offers the first step away from state dependence, social marginalisation and personal destitution.”

Nobody would argue with any of that, I suggest. We currently have over one million people aged between 50 and 65 who would like to work, many requiring training and a level of support to get back into work… not least because technology is moving apace and their existing skills set won’t necessarily get them a job.

Flexible working is a critical aspect which benefits ALL generations, and which is fast becoming expected of employers.

The mid-life MOT is an excellent concept which the Government helped kickstart and has given a lot of verbal support – but left to employers to get on with. This would provide an individual with the opportunity to take an independent look at their wealth, health and personal circumstances at one or more strategic points in their later career, with a view to opening a conversation with their employer on their future role and working hours.

The RetireEasy program presents one building block of that appraisal as it enables someone to see what their retirement income will be like in different scenarios, and judge when (or if!) they can afford to retire.

Healthcare support – particularly at work – is another vital consideration in enabling people to remain economically active for longer… encouraging more employers to proactively take this up would be a boon for employees and enable businesses to retain and recruit talented older people. As the number of younger people entering the workforce dwindles in the next decade or so, this should be a priority for all forward-looking employers.

Retaining talented older people

So, lots of sensible ideas – all of which would serve the excellent purpose of retaining the talents and experience of higher numbers of older people in the workforce.

But then comes the crunch line: “provided that this support is in place, we propose an increase in the state pension age to 75 by 2035”.

And this, with due respect, is where the report takes leave of its senses. In 2017 the government announced plans to increase the state pension age to 68 between 2037 and 2039. That was after long consideration, and it was the figure believed at the time to be fair and sustainable by the Government. It has only just reached the 65 mark, with women, in particular, caught up in a very (and often painful) rapid transition.

But 75? Yes, we are living longer than in the past (although that trend has now actually gone into reverse) but how many people aged 75 have the physical ability to be doing the 9 to 5? In some parts of the country it is actually past the point of life expectancy.

According to the ONS, disability-free life years at age 65 years in England is 9.9 years (8.9 years for males and 9.8 years for females). So, if you manage to beat the averages, you might get a few years of disability free life at the point of retirement; equally, you could be struggling to work through years of poor and failing health… afraid to drop out of employment because you wouldn’t have a State pension to depend upon… and many of us do depend on that.

And that ignores the millions of people who give up work to care for a loved one – 2.6 million at the last count: who is going to provide THAT care if the spouse is still having to work?

So what might the future look like?

My take? 75 is an “outlier”: proposing a figure that no one could realistically take seriously… but which gets the debate going on raising the SPA further and faster than is currently envisaged, and serves its purpose by preparing (softening up) the country for a policy change…

It certainly sends a message to everyone planning to retire in the next couple of decades, and able to save for a pension, to make sure they have sufficient funds in place not to have to rely too heavily on the State Pension for a decent retirement. That will only ever be a safety net… and a pretty flimsy one at that.

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