should people work longer?
People are living longer, and experts expect that trend to continue. A fundamental truth about pensions is that they come from the wealth generated by those who are working. The more people there are who are retired, the more challenging it is to fund decent pensions. One way to make this easier is to get people to work longer before they start getting a pension. But is this fair or practical? Read on ...
Question 1
Should the state pension age go up from 65?
The state pension age will shortly start to rise for women (it's 60 at the moment) so that men and women are both able to claim a state pension when they are 65. This doesn't stop people finishing work earlier either if they can afford to or, because they have to, if they cannot find a suitable job.
Some say that raising the state pension to 67, or even 70, would help ease the pensions crisis.
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Arguments for
It would save the government money, and if it encouraged people to work longer they would get better pensions for the savings they have built up if it is spread over a shorter period of retirement.
It's a relatively easy policy to implement, that would not require major reorganisation of the pensions system.
Some of the money saved could be used to improve pensions for those that miss out at the moment such as many women.
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Arguments against
It is unfair. Poorer people doing manual jobs do not live as long as better off people with good jobs. A higher pension age would mean that many would enjoy very little retirement. At the same time it means there will be less need to raise taxes, so will help the better off, many of whose retirement plans do not depend on state pension availability.
It's not practical. Employers do not want to employ older workers, and there simply aren't the jobs available particularly for those who have done less skilled and/or more physical or stressful jobs.
It will be unpopular. As society becomes more prosperous, why shouldn't people enjoy a longer retirement?
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Any compromises?
The government is already giving people a higher pension if they put off claiming their state pension. It could be phased in so would not affect anyone near retirement now. In Sweden the future pension age will be linked to how long people are living (although Sweden does not have the same level of inequality between rich and poor than we have in the UK).
Now it's time to vote...
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