Friday, 25 June 2010

Nick Clegg: "We are reinvigorating what retirement means"

The government is to speed up plans to raise the state pension age for men to 66, possibly by as early as 2016.

Ministers will also raise the option of extending it further, perhaps to 70 and beyond in the following decades.

The default retirement age of 65 - at which workers can be legally axed by employers - is also set to be axed.

Work and Pensions Secretary Iain Duncan Smith said it was time to "reinvigorate the pensions landscape".

Under the plans women will move to a state pension age of 66 a few years after men.

'Talent and enthusiasm'

The coalition team running pensions policy - Conservative Work and Pensions Secretary Iain Duncan Smith and Liberal Democrat pensions minister Steve Webb - announced the proposals at a briefing in London.

Mr Duncan Smith said: "Britain used to have a pensions system to be proud of, but due to years of neglect and inaction we are left with fewer people saving into a pension every year and the value of the state pension has been eroded, leaving millions in poverty.

"We must live up to our responsibility to reinvigorate the pension landscape.

"People are living longer and healthier lives than ever, and the last thing we want is to lose their talent and enthusiasm from the workplace due to an arbitrary age limit.

Labour's Yvette Cooper said raising the pension age sooner was unfair on people nearing retirement.

"We also need to recognise that to meet the challenge of providing an affordable, stable pensions system in a society with ever increasing life expectancy, people will need to work longer."

The previous Labour government's policy was to raise the pension age to 66 in 2024 and then gradually to 68 by 2046.

The coalition argues that this should be speeded up, eventually meaning a pension age of 70 or older.

The government also wants to scrap the default retirement age - which allows employers to shed staff at the age of 65.

Adam Marshall, director of policy at the British Chambers of Commerce, said such a policy would damage "businesses' ability to manage their workforce".

'Days of Dickens'

He urged the coalition instead to raise the default retirement age or "offer employers a new dismissal route that helps business manage their workforce, regardless of age".

For Labour, shadow work and pensions secretary Yvette Cooper accused the government of "moving the goalposts" for people in the fifties, leaving them thousands of pounds worse off.

She added: "This is unfair for a group of people who haven't got time to change their plans."

Bob Crow, general secretary of the Rail Maritime and Transport union, said: "As well as hitting pay, living standards, public services and jobs, the latest assault from the government is work until you drop.

"If you are a rich banker with a private pension you can sail off on your yacht at 55, but for working men and women retirement will be pushed further and further over the horizon in a step back to the days of Dickens. That is not sharing the pain, it is hitting the poorest hardest yet again."


UK life expectancy is currently 77 years for men and 81 for women.

Paul Kenny, general secretary of the GMB union, said: "The government knows that manual workers in the industrial regions of the UK do not enjoy anything like the same life expectancy as professionals or other classes or employees.

"To force someone who has done a lifetime of toil on building sites, farms or in factories to work until they are 66 is completely unacceptable."

In Tuesday's Budget the government announced that, from April 2011, the state pension would go up by the increase in average earnings, or in line with prices, or by 2.5% - whichever is highest.

Previously it would go up every April by 2.5%, or the level of the Retail Prices Index the previous September.

This had been considered as unfair by some, as prices had lagged behind average earnings.


This is a knee jerk reaction from the coalition which brings forward the proposals of the previous Labour government – so all 3 parties are offering the same analysis and the same response – take it out on poor pensioners.

We agree with the National Pensioners Convention that this is forcing older people who have already worked for 40 – 50 years to forgo another year of retirement and because of the poverty level of pensions paid by the state in the UK ( UK offers practically the lowest level of real pensions and as a percentage of average wages in the EU).

There are 2.5 million people out of work aged 50 – 64. Raising the pension age by 1 year, then another and another until we reach 70 as the state pension age will just mean that more and more people will be unemployed and on benefits instead of getting their rightful ( and higher) pension entitlements. There is no strategy to market and promote older workers and age diversity to employers from all sectors ( PLCs, private, voluntary and public sector) so there will be no increase in the numbers of over 50s let alone over 65s being given jobs – currently if you are a man aged 55 who has lost his job you have less than 5% chance of getting another permanent job – full or part time.

There is no legislation to enforce the right to work for those over 65 if they wish to do so, therefore many people reaching 65 will be made redundant. While we do not support any legislation which compels people to continue working we do support people’s right to work if they wish to and can do so. Unfortunately one of the main reasons for people so doing is the poverty level of pension provision – even with pension credits the total amount of a full state pension is below the poverty line – thus forcing people to continue to work.

This has to be addressed over the next period of time and we older working age people need to make ourselves heard in any consultation / feedback process which is launched, in order to challenge the lazy thinking behind this. The need for proper pension provision is a basic right in any democratic civilised society and not to force people to work until they drop. The current crisis is not one of just demographics it is the failure of the state to provide a basic living pension, a failure of employers to meet their pension obligations to maintain high senior management remuneration and high share holder returns and the failure of the hardly regulated financial industry to provide reasonable returns to private pension savings ( Equitable Life for example). The problem is not between pensioners and young workers it is between all workers as opposed to the top 5% of earners, shareholders, financial speculation and banking irresponsibility.

If we are to help older people wishing to work until 65 then we need to help them with training and other support – where currently older workers are last in line for training opportunities as well as challenge employer stereotypes.

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