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United Kingdom

Former pensions minister Baroness Altmann give her verdict on plans to raise state pension age to 75

Very little in politics these days surprises me, but my jaw dropped when I read about proposals to delay the state pension starting age to 75.

What was The Centre For Social Justice [CSJ] thinking to suggest that it be raised to 70 by 2028, and then to 75 by 2035?

Forcing Britons to work until their mid-70s may help to boost the economy by £182 billion a year, according to the think-tank in a paper published this week, but to me the idea is chilling and immoral.

It is an outrageous betrayal of people who have worked hard, paid their taxes and made their National Insurance [NI] contributions for decades in the expectation that they will receive at least a basic income so they can retire, rather than being forced to labour until they drop.

Forcing Britons to work until their mid-70s may help to boost the economy by £182 billion a year, according to the think-tank in a paper published this week, but to me the idea is chilling and immoral (stock pictured)

What's more it is deeply iniquitous. Currently, anyone healthy and wealthy enough to wait can achieve a higher state pension by delaying when they choose to take it. But those who are in poor health, or caring for loved ones unpaid, cannot get a penny of their pension until they reach the minimum age — which seems to be constantly rising.

A more sensitive approach would be to ensure that people's health, working life and responsibilities are taken into account as I shall explain.

The British state pension has been repeatedly ravaged by successive governments.

Hardship

Women who once expected to retire at 60 now have to work until 65 (and from next year 66) to bring their pensionable age into line with men.

Under current plans, the retirement age is set to rise further for both men and women, to 67 by 2028, and 68 between 2044 and 2046 (although in 2017 the Government announced plans to bring that forward to between 2037 and 2039).

Now the fact that retirement at 70 or 75 is even being mooted is another alarming development. Rarely have I seen a proposal with the potential to do such damage. The flaws in the thinking must be challenged immediately, before there is any chance of the CSJ paper being adopted by politicians who see it as an opportunity to boost the nation's coffers.

Certainly, the outcome would be politically disastrous for any party who contemplated it.

To understand how dangerous it can be to keep raising the pension age, look at the mismanagement of that switch from 60 to 66 for women.

Women who once expected to retire at 60 now have to work until 65 (and from next year 66) to bring their pensionable age into line with men (stock pictured)

It has created hardship for many, due to the Department for Work and Pensions' failure to tell all of those women — some 3.8 million — born in the 1950s what was happening.

The DWP is particularly poor at communicating major shifts in policy and many had no idea the rules had changed. They had expected to retire at 60 and had planned their finances accordingly. It came as an enormous and distressing shock when they learned they had to wait another six years to receive their pensions.

Our pensions are too important to be tinkered with repeatedly, something that Gordon Brown, both as Chancellor and Prime Minister was guilty of.

He introduced mass means-testing for the state pension and capped the amount that can be saved tax-free towards a private pension. He also withdrew billions from defined benefit schemes — once the pride of the British pensions system — which eventually brought about their closure.

Our pensions are too important to be tinkered with repeatedly, something that Gordon Brown, both as Chancellor and Prime Minister (pictured in 2007) was guilty of

More recently, governments have cut tax-free pension allowances even further.

And those who were able to invest in buy-to-let properties as a nest egg have also been hit by punitive taxes.

It is dishonest of governments to encourage working people to choose one method of saving for their old age, only to move the goal posts.

But even worse injustices are threatened by the CSJ's proposals. Average life expectancy varies widely across the population. The Biblical notion that a good lifespan measures 'threescore years and ten,' or 70 years, makes little sense today.

The better-off, whose employment does not usually entail physical labour, might hope to live well into their 80s with good health. But for people burned out by tough manual work, who tend to have poorer housing, diets, access to healthcare and are at greater risk of ill-health and frailty, death comes much sooner.

This is already a grave injustice in our society. Driving up the pension age even further makes it worse — particularly for those groups who are statistically more likely to die in their late 60s or early 70s, who will suddenly see the finishing line pushed so far into the distance that it becomes meaningless.

And yet they have decades of NI contributions to their credit which they will never benefit from.

Discrimination

Even as it stands, current state pension policy fails to recognise those in the most deprived areas tend to die younger and on average spend 19 more years in poor health in old age than people in the least deprived parts of the country.

Raising the pension age further still, on the basis of average life expectancy, will create even greater discrimination.

The UK state pension is already the lowest in the developed world. With the CSJ proposals, we would be penalising those who are already vulnerable and discriminated against.

In its defence, Andy Cook of the CSJ claimed: 'Working longer has the potential to . . . increase retirement savings and ensure the full functioning of public services for all.'

Raising the pension age further still, on the basis of average life expectancy, will create even greater discrimination (stock pictured)

Yes, it is true that keeping more older people in work would boost the economy and cut public spending. Indeed, official estimates suggest that raising the average retirement age by just one year would add one per cent to national output (GDP).

But forcing people to wait longer for their pension, regardless of their circumstances, is not a fair welfare policy. Nor does it fulfil the original purpose of a state pension. Boosting growth and cutting spending on the backs of our oldest workers is wrong.

Working longer can be beneficial for many people's health and wellbeing, but not all. A good pension policy should be about encouraging a longer working life for those who want it, not forcing it on people who don't, or who cannot cope.

The CSJ proposal also raises the farcical prospect that, if the retirement age is raised to 75, 74-year-olds who can't find work will have to draw unemployment benefit.

More than a million over-50s want to work but can't find a job because age discrimination is embedded in the labour market. Increasing support for these people — with retraining programmes and employer incentives — should be the first priority, before increasing the state pension age.

Abolished

We need to get away from the idea that there is one 'magic age' beyond which people won't be expected to work. Other factors should be used to determine eligibility.

For example, the number of years that people have made contributions to National Insurance could be taken into consideration, with perhaps the criteria for a full state pension at 50 years of payments. Those who started work earliest (usually the lower-paid) could retire earlier too, while those who moved to the UK later in life would get less, on the basis that their contributions had been less.

Another option would be to enable people to start drawing a reduced pension on health grounds or for unpaid caring roles. In this way, the flat 'pension age' cut-off would be abolished.

And that would be fine with me. Because nobody in Britain today should be chained to a specific retirement age at which they stop work altogether, and certainly not 75.

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