Jenny Willott MP writes: Calling for a fair rise in the State Pension age

In 1970 a person reaching 60 could expect to live a further 18 years. Last year, they could expect to live another 28 years. Advances in healthcare, living standards and technology mean that people in the UK are living longer and life expectancy is rapidly increasing.

This is something we should celebrate, but it is also something for which we must plan. We cannot expect people to work until they drop but the longer people spend in retirement, the more strain this puts on public services and, in particular, on the Government’s ability to pay people a decent pension.

Last year around 2 million pensioners were living in poverty, so as well as ensuring our pensions are sustainable, we must do more to reduce the number of people retiring in poverty.

But if we are to invest in the state pension and tackle pensioner poverty, we can’t do it by increasing the burden on those who are working. Wages are flat and prices are rising, and we need to create a sustainable way to manage our aging population, rather than continually increasing the demands on tax payers.

So the Government is right to look at raising the state pension age, and I support the Government in doing so. However, while it means hundreds of thousands of women will have to work longer, they will get a better pension at the end of it. The Government, in the shape of our very own Pensions Minister Steve Webb, is planning to introduce a flat rate pension for new pensioners from 2016, so while people will have to retire later, they will do so on a better pension, reducing the numbers of pensioners who have to decide between food and heating. Working a year more is a trade off, but one that I believe strikes a fair balance.

However, women born between 1953 and 1954 will have to work more than just a year longer, and a small group of 33,000 women, born between March and April 1954, will have to work a full two years more before they receive their pension. I do not believe that the current plans are fair on these women.

People need time to plan for their retirement and to make these women work for so much longer at just seven years notice would be deeply unfair. That is why I recently called on the Government to think again about these plans and find a way to make them fairer for those women worst affected by the changes.

Under any other Government I would be sceptical whether ministers would listen and respond to this call, but with Lib Dems inside Government I am confident that a solution can be found and we can continue to show that the Lib Dems provide the strongest, most progressive voice for pensioners.

Jenny Willott MP is the Co-Chair of the Liberal Democrat Parliamentary Committee on Work and Pensions.

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16 Comments

  • We have had discrimination in the workplace for generations. Slowly we have worked towards treating men and women equally. We now have equal rights to work. Just last year, councills equalised pay between male dominated and female dominated jobs of equal value. Now we’re equalising retirement ages. Was reducing the pay of Bin Men and increasing the pay of Dinner Ladies unfair on men? Surely, neither is equalising the retirement age of women.

  • But if we are to invest in the state pension and tackle pensioner poverty, we can’t do it by increasing the burden on those who are working. Wages are flat and prices are rising, and we need to create a sustainable way to manage our aging population, rather than continually increasing the demands on tax payers.

    It’s really surprising how often Lib Dem politicians have implied over the last few days that people in the public sector are not among “those who are working”!

    But in any case, wages have risen by 80% in real terms since 1970, while total public spending as a percentage of GDP today is about the same as it was then. If there’s really something “unsustainable” going on, it’s the belief that the living standards of those in work can continue to sky-rocket indefinitely. But apparently that can never be questioned.

  • So, just to recap – the Coalition is happy to pay old people their pensions, so long as they kick the bucket in less than two decades.

    There is an alternative – how about lowering the pension age? Increasing the number of people retiring means an increase in the number of job vacancies, which means a lowering of unemployment, a fall in welfare expenditure, a corresponding rise in tax revenues, rise in living standards, a decrease in the misery of unemployment and an increase in all-round social cohesion. A win-win outcome. Problem solved.

    Or am I being in some clandestine, imperceptible way – unfair?

  • I agreed with you until you said:

    “to make these women work for so much longer at just seven years notice would be deeply unfair”

    You haven’t explained why you think it’s unfair. The equalisation of men’s and women’s retirement ages reduces unfairness. You seem to be arguing that it’s only fair if we keep the unfairness going a little longer.

    Exactly why do you think it’s unfair for some women to work longer “at just seven years notice”. Seven years is a long time and I would suggest that a very small percentage of people have any plans that far ahead.

    It’s unfortunate that we all, male and female, have to work longer but, as you say, there is no alternative. With any change like this there will be some people who slip in under the net while others a few days younger get caught.

  • Malcolm Todd 20th Jun '11 - 1:53pm

    There is an alternative – how about lowering the pension age? Increasing the number of people retiring means an increase in the number of job vacancies, which means a lowering of unemployment, a fall in welfare expenditure, a corresponding rise in tax revenues, rise in living standards, a decrease in the misery of unemployment and an increase in all-round social cohesion. A win-win outcome. Problem solved.

    Or am I being in some clandestine, imperceptible way – unfair?

    Not unfair, just illogical, I’m afraid!

    * “increase in the number of job vacancies” – yes, but not an increase in the number of jobs, so there is no basis for expecting a “rise in tax revenues”
    * “a fall in welfare expenditure” – true … if you don’t count pensions as welfare. Unfortunately for this idea (but fortunately for most people’s view of what’s fair), we tend to pay pensioners rather more than able-bodied working-age people, so swapping a job seeker’s allowance claimaint for a state pensioner will mean an increase in state spending
    * “rise in living standards” – for whom? Not many people are better off as a result of retiring. Of course, for those who are unemployed or on the sick for some years before qualifying for a “retirement” pension, bringing that date forward will increase their income – but then we’re back to the state expenditure problem.

    Sorry about that.

  • Malcolm Todd 20th Jun '11 - 2:01pm

    Seven years is a long time and I would suggest that a very small percentage of people have any plans that far ahead.

    Julian, I’m going to stick my neck and guess that you’re quite a young chap. People in their 50s, in my experience, do indeed tend to have pretty well worked out retirement plans, and have often been working towards it – bringing together career decisions, private and occupational pension plans, and issues around their property – for some time; and they would have been foolish not to factor in what income they can expect from the state and when. Seven years is not such a long time. I do have some sympathy for people who have been put in this position. Sure, it’s generally crazy (from a societal perspective) that so many people expect to retire forever in their late 50s or early 60s and live without working for 25 or 30 years; but it’s a perfectly rational response by individuals to the situation that exists. The unfairness involved is in changing the ground beneath people’s feet after they had been assured of what the terrain would be.

  • “Sure, it’s generally crazy (from a societal perspective) that so many people expect to retire forever in their late 50s or early 60s and live without working for 25 or 30 years”

    Obviously this is the result of technological progress, and – as I’ve already pointed out – it’s been accompanied by an 80% increase in real wages over the last 40 years.

    I don’t understand at all what you think is “crazy” about it. To a visitor from a century ago it would probably seem miraculous.

  • mike cobley 20th Jun '11 - 4:16pm

    Malcolm, thanks for eviscerating my mighty off-the-cuff scheme…but you dont disagree that it would lower the unemployment rolls, hmm? And in any case, at least I had a shot at resisting this unfair bailout surcharge on pensioners-to-be. Much of the ‘crisis’ we face is part fabricated, part hyperbole; if this really was a dire crisis then truly strict measures would be taken against those holding 40% of the nation’s wealth, the top 5%, and to ensure that tax owed by corporations is actually paid. But these steps are conspicuous by their absence, ergo the crisis is a construct designed to siphon wealth off from the undeserving, pampered citizens of Britain.

    Yes, an intemperate polemic which will no doubt attract disapproval, but thats okay – this is the process by which we move closer to the truth.

  • Bernadette Castellan 20th Jun '11 - 9:17pm

    I am one of those women who have been ‘caught ‘ by the proposed changes in the age of retirement. I was born on 7th. March 1954. I have worked since 1975 and for much of my working life expected to retire at 60. I accept that there is a need to increase my pensionable age and made plans to retire when I was 64, trying to make sure that I had savings to bridge the gap should I be unable to continue to work until I reached the age I can claim my pension. I am now 57 and 4 months and I find that I will not get my pension for a further 2 years, when I am 66. I feel that this is very little time to make adequate financial plans. I feel cheated and that I am being treated unfairly.

  • Actually, at 46 I had been planning to retire from my current job in 5 years time, make way for someone else and then do something else until I retire finally. This isn’t new, I have been planning to do this for at least 20 years. In all of this time, other colleagues have done exactly the same thing.

    Now, I see that my retirement’s to move to 66, while I still keep shelling out for the lucky ones who got out, and while i must work on, and on, I hae to expect less pension for myself in return.

    Something is not right, so please, stop trying to tell me that the changes are fair. You may think they’re needed (I may think that a short term crisis being used as a smokescreen to rob intended state pensioners) – but ‘fair’ they most certainly are not.

  • Paul Kennedy 20th Jun '11 - 11:33pm

    I’m a big fan of Jenny’s – if only our other Ministers had followed her lead and resigned so they could keep their pledges (and follow party policy) on tuition fees.

    She’s right on this issue too, and there are hints from the Government that it will take care of those affected.

    But hold on a second. Why do we need to have an arbitrary cut-off date for state pensions at all? What is so special about being 65 (or 66) that means you need a full pension at that age, but you get nothing at all at age 64?

    It’s great we’re introducing a citizen’s pension from age 65 (or 66) and the universal benefit for those not yet eligible, but we need to bring them together so there isn’t an arbitrary cut-off age for pension benefits.

  • Angela Sullivan 21st Jun '11 - 5:19pm

    At the same time as the retirement age is being raised the requirement to have contributed to the scheme is being lowered. Why? It used to be 39 years of contributions or credits for a woman, 44 for a man. This is being reduced to 30.

    At the moment people are getting healthier and living longer. Will this trend continue? The people who are now living to a ripe old age are those who got milk, vitamins and orange juice on the welfare state when they were young. When the generations who grew up in the Thatcher era, when some had a very comfortable life while others emphatically did not, come to maturity there could be very significant differences in the life expectancies of rich and poor.

    My guess is that this increase in the retirement age will hit the poor hardest. They start work younger than the rich, are more likely to engaged in types of manual work which require strength, dexterity, or sharp eyesight, all of which decline with age, so are more likely to struggle to continue working into their sixties. To add insult to injury, they will then (on average) die earlier. The new pension scheme, with its higher flat rate, will be very nice for people like myself who have an occupational pension in addition to it and live in a house which they own outright. It will be a lot harder on someone with no other income who needs to find rent.

    Another unwanted side effect of increasing the retirement age will be a severe blow to the Big Society. The recently retired are one of the most important groups in the voluntary sector, with people in their late fifties and early sixties playing a major role in many charities and other voluntary roles. Who will replace them?

  • Elaine Clague 24th Jun '11 - 3:25pm

    I am one of the unfortunate women caught by the proposed state pension age changes.
    I am 57 years old, born in March 1954 and can now expect to wait a further two years for my state pension.
    This may sound like moaning BUT
    I have friends who are only a few years older than me who are already receiving state pension or who will shortly do so.
    How is that fair?
    I have worked constantly since 1972 (39 years) so feel that I have actually contributed to the pension that is now being denied me.
    How can it be fair to expect me to wait another two years?
    I am one of the “put upon” civil servants who are watching their final salary pensions being dismantled. Not only are we expected to work longer but we are also expected to pay more pension contributions.
    This would be ok but for the fact that we have a 2 year pay freeze and before that was imposed we received pay increases of one per cent!
    How is that fair?
    Sometimes I feel that I am being singled out to pay for the current economic crisis.
    Again, how is that fair?

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