Perilous time as Government threatens to raise pension age

Sandra Chapman

Sandra Chapman

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History doesn’t tell us much about how the idea of retirement became something to aspire to.

What we do know is that past generations had to work for their entire life, most only laying down the burden when they died.

Pension problems

Pension problems

With young people these days being warned they may have to work until they are 74 and with the Government currently urging businesses to hire a million older people under the guise of confronting ‘age bias’, it doesn’t take a mathematician to tell us the tide could be turning backwards, with more and more people never seeing retirement because of illness and early death.

Governments don’t like having to pay state pensions and the current incumbents would like to see the end of the triple lock at least which ensures state pensions rise by the rate of inflation or 2.5 per cent, whichever is highest.

Former pensions’ minister and campaigner Baroness Altmann isn’t happy about people having to work well into their 70’s calling it ‘unreasonable’ and unfair and she points to the fact that some people have much shorter life expectancy than others.

The first old age pensions were paid out in the UK on January 1, 1909. Some 500,000 people aged 70 or more became eligible for five shillings a week (£.0.25p) with a slightly higher 7/6d paid to a married man.

At the time only one in four people reached 70 years and life expectancy at that age was another nine years.

Pensions have been tinkered with ever since. By 1940 men got the pension at 65, women got it at aged 60 and these ages too are changing.

I think back to the grandfather I never knew. James died, aged 71, five years before I was born and I know he worked nearly until his death.

A stonemason by trade he lost an eye in a work accident and not long afterwards developed the cancer which took his life.

So retirement for him was never an option. His wife, my grandmother Grace who was 11 years younger than him died two years later aged 62. So my grandfather collected the Old Age pension for just one year and my grandmother may have received a widow’s pension only for just two years. So the Government of the day would have been quids in as they say.

And it’s possible, that if people today are going to be forced to work until well into their 70’s, and with lifespans not significantly higher by then, the Government’s coffers should be well filled.

With workers today increasingly facing hourly contracts and robots doing the jobs people once did how are people going to save money for their future? People may have less children now than previous generations but the population is still growing and the state pension is in some peril.

Baroness Altman believes some people should be allowed to get their state pension earlier if they had long working lives or if they’re not well.

She describes increasing the pension age as ‘a blunt instrument for managing pension costs and tends to disadvantage lower paid and those living in parts of the country with lower life expectancy’.

She believes because average life expectancy is rising that does not mean it is fair to keep pushing the pension age up. So, in some ways, we are back to 1908. It’s quite likely then that politicians never imagined that people would live much beyond 70 so the State wouldn’t have to pay Old Age pensions to individuals for very long and my grandparents were a case in point.

Yet, while life expectancy may be increasing a little for this generation quality of life and a reasonable financial future have never been more uncertain. Less dogma from the Government would help.