Living longer does not mean we should all work longer
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In the UK in 1917, King George V sent 24 congratulatory telegrams to citizens who had reached their 100th birthday. By the mid-1980s there were about 3,000 centenarians. In 2019, there were more than 13,000.
Statistics like this highlight the huge improvements in life expectancy we have experienced in the past century. They are often cited by governments to justify decisions to raise the age at which people receive their state pensions. The UK, for example, has linked the state pension age to longevity, with the principle that people should expect to spend about a third of their adult lives on average in retirement.
But what if longevity isn’t rising for everyone? Data from England, which predate the coronavirus pandemic, show a nascent but troubling development. While life expectancy has continued to rise in rich neighbourhoods and in the poor parts of affluent regions like London, it had started to fall since 2010 in the most deprived areas of poor regions like the North East. This raises questions about the fairness of increasing the state pension age at the same pace for everyone.
There are concerns, too, about whether the poorest workers will be physically capable of working for longer. On current plans, the UK state pension age will rise from 66 to 67 between 2026 and 2028. But data published last week show that men and women in the most deprived areas of England can only expect to live 52.3 and 51.4 years in “good” health respectively, compared with 70.7 and 71.2 years respectively for those in the least deprived areas.
The low-paid jobs that predominate in deprived areas are often the least suitable for older people in poor or variable health. It is a mistake to assume that deindustrialisation in the developed world has done away with strenuous jobs. Some 21st-century blue-collar workplaces like online retail warehouses exert wear and tear on the human body, too. According to a large official survey of European workers, 72 per cent of high-skilled white-collar workers said they could do their current job at age 60, but only 44 per cent of lower-skilled manual workers.
And that was all before the pandemic hit. It is likely the virus will worsen the health divide between rich and poor. Although we still have a lot to learn about its long-term effects, we know that deprived communities had the highest infection rates, and that many of those admitted to hospital are struggling to make a full recovery.
Baroness Ros Altmann, a former pensions minister, has called for an urgent rethink of the system, with new flexibility so that struggling groups can access their state pension early.
There is a good argument for the UK’s simple approach to the state pension. It makes sure the system doesn’t grow too unaffordable, which is important for the younger generations who have to pay for it with their taxes. It also avoids the messy complexity of varying the state pension age by postcode (what if people move around?) or job history. John Ralfe, an independent pension consultant, argues the system is fair already because more affluent workers pay more tax. “The people with the highest likelihood of reaching 103 are the people who are paying in the most anyway.”
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It is also fair to say it is most important to tackle the deep causes of poor health and the decline in life expectancy in some areas. This would require a concerted effort to put more money into children’s services, education and health in deprived areas, as well as reforms to the labour market that result in more secure and less strenuous work.
But there is little sign the government intends to make such a push. Without it, the pressure to let some people have their pension early will ratchet higher. A number of other countries have already opted to give pension benefits early to some groups. Portugal, France and Germany allow penalty-free early retirement for people who started work young and have had long working lives.
Last year, Denmark decided to allow 61 -year-olds to retire one to three years earlier if they had spent more than 42 years in the labour market (which can include periods of unemployment). “You should be able to stop working before you are worn down,” Prime Minister Mette Frederiksen said. The Danish government argued that by addressing a key fairness concern, this reform would strengthen public support for the push to increase the retirement age for everyone else.
Decisions about retirement ages are so difficult because they sit at the confluence of two trends: the fact we are growing older, and the fact we are growing more unequal. Unless we tackle the latter, the former will be harder to bear.
Letters in response to this column:
Shift in life expectancy puts a focus on retraining / From Paul Hodges, Chair, New Normal Consulting, Stäfa, Switzerland
From Gulliver’s Travels to the Bible, nothing is new / From Mike Pugh, London IG8, UK