Wait until 75 for your state pension? I don’t think so
There was widespread alarm last week when Iain Duncan Smith’s think-tank, the Centre for Social Justice, proposed increasing the UK state pension age to 75 by the year 2035.
Yet even the oddly titled Ageing Confidently report was not quite sure how much longer we might have to work before getting our dues.
The state pension age for men and women is set to rise to 66 in October 2020. When I asked the think-tank what timetable it proposed to nudge this up to 75 in the space of 15 years, its public relations agency told me: “Our recent pensions report does not go into such detail.”
So I got out my spreadsheet and attempted to fill in the gaps myself based on the two dates given in the report — age 70 by 2028, and 75 by 2035.
Theoretically, this could affect everyone born after April 6 1955. I say theoretically, as the Department for Work and Pensions has poured scorn on the idea, telling me: “We will not be raising the state pension age to 75. Fact.”
But with the current political mood, who knows what could happen?
Even if new chancellor Sajid Javid announced such a policy in his October Budget, April 2021 would be the first realistic date to begin the change, raising the age from 66 for people born April 6 1955 to May 5 1955 by up to a month. An even rise to 75 by 2035 gives the timetable below.
It would mean “Waspi” women, born in the mid to late 1950s, who have already suffered two increases to their state pension age would have a third added — this time, for up to nine years. Men who have already been warned of a one-year rise would face a second, much longer delay.
The 62-year-olds born in July 1957 who expected a pension at 66 would get barely three and a half years notice that they will have to wait another four years to age 70. People aged 59 would face the maximum rise of nine years from 66 to 75 with barely six years notice.
This timetable would shred the key recommendation of the 2017 Cridland Report on state pension age: “People need at least 10 years notice of change.” It would also ignore his other recommendation that changes “should be limited to once a decade”.
The think-tank did not work out this detail because its calculations were based on achieving an Old Age Dependency Ratio of between 20 and 25 (the number of pensioners per 100 working people).
Currently, the ratio is 28.6 — between three and four working people per pensioner. By 2050, it is forecast to be 48 (around two workers each). The CSJ says that “is raising serious concerns about long-term fiscal sustainability in the UK”.
Concerns by whom? Despite 295 footnotes and eight pages of bibliography, that question is not answered in its report. Nor is it explained anywhere why an OADR of 20 to 25 is the target when it is currently nearly 29 and the UK economy — excluding Brexit-related effects — is apparently in good health.
The headline-grabbing recommendation of raising the state pension age further and faster than ever before comes right at the end of pages of detail about how difficult today’s over-fifties find it to get work.
It admits “employers do not treat age discrimination as seriously as other protected characteristics” — one reason why “less than half the UK population were in work the year before state pension age”. Only on page 47 does it then hit them with a plan to make them suffer unemployment and discrimination for nine more years.
Earlier CSJ proposals to help people “age confidently” at work range from vacuous “age positive initiatives” and “employee tailored mid-life MOTs” to the fatuous “Superflex Aura Powered Suit, designed to help people get up, sit down, and stand for long periods of time.” The report seems to envisage a future where employers invest millions in exoskeletons and marketing gimmicks to keep people in their seventies at work as their muscles and senses weaken.
The fact is, humans wear out — a process that starts at different ages for different people. In deprived areas of the UK, men’s life expectancy is already less than 75. While working can be good for your health, it can also make bad health a lot worse.
Last week, I tweeted: “This proposal to extend state pension age to 75 might be fine for those who only have to turn up in London, sit in a chair, think a bit, and produce a report. But for many, from scaffolders to surgeons, who need efficient bodies and senses it is daft.”
The 8,000 engagements that followed included plenty from people in their fifties, who tweeted they were already exhausted by their physically or mentally demanding jobs.
Others highlighted jobs that could not be done until age 75, including social workers, bricklayers, teachers, nurses, dancers, firefighters, paramedics, prison officers and musicians.
One profession was strangely silent — politicians. Those responsible for the policy decisions that seal our financial future may be worrying about how to “relieve fiscal pressures” but Mr Duncan Smith will not be worrying about when he will receive his own state pension. Born in 1954, by my calculations, he will escape the proposed increase by a whisker.
Paul Lewis presents ‘Money Box’ on BBC Radio 4, on air just after 12 noon on Saturdays, and has been a freelance financial journalist since 1987. Twitter: @paullewismoney