In a recent piece for Learning Consultancy Partnership (LCP) I explained The National Institute of Economic and Social Research’s (NIESR) recent announcement that increasing the retirement age to 68 by 2020 could be the answer to the economy’s problems, and could reduce some need for cuts. Unsurprisingly this solution was not welcomed, with widespread unpopularity for the government’s existing plans to increase the State Pension Age (SPA) from 65 to 66 by 2020 (and 68 by 2046) – in contrast to the Labour government’s plan to up it in 2026.
What the NIESR report has made clear is that there is a real rationale for this accelerated increase, despite few seeming to support it. Read on for a summary of each side of the debate and let me know your view. Will the changes affect your organisation or your own plans?
FOR a bigger and/or sooner retirement age increase
- NIESR estimates the UK economy was performing 4% under its potential at the end of 2010 – ‘if we cut spending less and raised taxes more growth would be 1/4% higher in 2011 and 2012′. Increased tax revenue would also be generated by a higher retirement age. Increased retirement age also means less increase in taxes.
- By improving growth an increase could have other positive effects e.g. rather than negative impacts on unemployment or development of newer staff, higher growth would in turn improve these.
- Research shows that people are opting to retire later and later anyway, with some predicting that ‘in the future retirement will be phased out’ as people choose to continue working in some way to stay active and social.
- Labour MP Rachel Reeves spoke out earlier this week against existing plans, explaining that 500 000 women aged 56 and 57 would be treated unfairly, having to wait more than a year longer to receive state pension with little time to plan.
- Michelle Mitchell, Age UK’s charity director, explained that before any change the government needs to address several issues: ‘the government must first reduce the health inequalities between rich and poor, and create a much fairer job market for older people. Failure to do so will force millions of older people, many of them poorer and with lower life expectancies, to work for longer or face another year trapped in unemployed limbo’.
- Paul Kenny, the general secretary of the GMB union explained that justifying the increase on higher life expectancy is unfair: "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, in farms or in factories to work until they are 66 is completely unacceptable."
