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Let’s tackle future pensioner poverty now

elderly people crossingMy brother-in-law is a builder and turned 60 last year. He is physically fit for his age, I almost bought him a ‘Congratulations you’re 50’ card by mistake. However he is not likely to be able to sustain his highly physical job for another five or six years; certainly not for a decade.

When I have argued publically that firefighters should be able to continue to retire early on the grounds of not being fit enough to do the job without losing a considerable amount of their pension, most people have broadly been in agreement. The Government’s attempt to use envy when ministers point to the fact the pension age for firefighters would still be lower than for the general working public doesn’t wash with most people. They would rather be carried out of a burning building by someone who is up to the job.

We rely on people who do physically demanding jobs – we need builders, firefighters, cleaners, care workers and police officers who are fit enough to do the job. Increasingly all mainstream political parties are accepting that all pension ages should rise. The state pension changes, auto enrolment and company schemes are reflecting this. Contributions are rising and the length of time people are expected to pay into pensions is increasing.

A report this week revealed that rich Londoners live up to 25 years longer than people from poorer parts of the capital. While a number of factors influence this people’s work and the amount of money people have when they retire is a factor in relation to both quality of life and lifespan.

Recent reports have stated that those born in the 60s and 70s will be worse off than our parents in our old age. We can’t sustain pensions at the level the current older generation are receiving with increasing life expectancy without contributions increasing considerably. However, we need to make sure we are realistic about what it means and make sure that the burden for increasing contributions doesn’t come entirely from workers. We also need to be ambitious about our expectations of what people can have to live on in their retirement. If we lack ambition we will fail to meet the future need.

If people continue to live longer, we need to take responsibility and pay for this. There needs to be a balance between the employer, individual employees and the state. It is not clear what those who can’t cope with the physical (or stressful nature) of their job as they head towards 70 are going to live on in the run up to retirement and what jobs they are going to do. Are they expected to change direction in their 50s and 60s? If so, employers need to have a flexible and open mind to recruitment of more mature applicants. The Government will also need to be clear how an expanded older workforce will fit in with cracking long-term unemployment among young people. If people work part time or are otherwise underemployed then this is likely to affect their pension and anyone who knows women with young children is aware decent part-time work options are currently already often limited and low paid.

If we are serious about pushing ahead with raising the pension age, we at the very least need a radical rethink of what the last ten years or so of someone’s working life looks like and how people are supported in to other (suitable) employment through advice, training and education. I know several people who have recently had dealings with job centres. The current approach to people out of work appears generally dehumanising, demoralising and devoid of compassion. Raising the pension age without raising the bar on making sure people can find appropriate alternative work if they need to is likely to lead to an increase, not a decrease, in costs to the state as more people are forced onto benefits in the years before their formal pension age.

On the bright side, being in my 40s, I was heartened reading reports of the pension changes announced last month to establish that I could still be defined as a ‘younger worker’. I couldn’t find anything else, however, that was heartening about the announcement on the rise in the state pension age. The lack of debate about the implications of the changes is disappointing. We need to make sure any changes aren’t just a blunt money saving measure. I wouldn’t be surprised if in another 25 years we are scratching our heads wondering how anyone thought the maths would stack up.

We urgently need a wider debate about what we want working for 50 years or more to look like, so that both the young and the old (and those of us in the middle) have a better chance of getting decent jobs with decent pay and end up with something approaching a decent pension in our old age.

Fiona Twycross is a Labour Londonwide Assembly Member

One Comment

  1. eric clyne says:

    Exactly right. I would like to see the following included in the debate.

    The proposed investment bank will be a big step in the right direction. We need to discuss it in more detail. As a nation we do not save enough and we do not invest enough. Yet we want to spend more and more on services.

    Does Britain need a Sovereign Wealth Fund to help pay for pensions in the long-term? An investment of £10 billion a year into British industry with major British and European partners would create jobs now and pay dividends in the future.

    Wealth creation must be at the centre of the debate on Labour’s economic policy. We cannot spend it if we do not have it.

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