Summer’s nearly done, and the late August Bank Holiday weekend is always a time for reflection before we plunge into the autumn.
The noise of the moment – right now the boom in equities and gloom at the upcoming Budget – so often drowns out any thoughts about longer-term trends.
So let’s focus on what is arguably the most important of those: how we cope with ageing Britain.
It’s a hot political subject, with pressure on the state pension triple lock and headlines about the state retirement age being pushed up to 70, as is happening in Denmark.
It’s a troubling social issue, witness the growing number of women unable to retire because they can’t afford to, as John-Paul Ford Rojas reports on the previous page. And of course it’s a practical matter for us all: what do we want to do in later life?
The maths is daunting. The number of people of working age relative to those of current retirement age is shifting with a smaller workforce having to support a huge rise in retirees.
Daunting: Working longer should be strictly voluntary and not to avoid destitution in old age
Since National Insurance is based on the system that each generation of working people pays the pensions of the previous one, if nothing is done the tax burden must inevitably rise further.
There is no pot of money to fund the state pension, which relative to regular pay is already one of the lowest in the developed world.
That’s despite the triple lock whereby it increases by average earnings, inflation, or 2.5 per cent each year, whichever is highest.
Life expectancy has recovered since the blow of the pandemic and is now climbing again.
And a study last year by the Institute for Fiscal Studies found that nearly half the older adults who left the workforce in 2020-21 had ended up in relative poverty.
So what’s to be done? The state won’t be much use, given all the pressure on public finances, even if it becomes a bit more competent than it is at the moment.
It’s tough to tell young families trying to buy homes and pay higher taxes that they have to save even more for their private pension, though they probably do.
So there is really only one way of squaring the circle. It is to find ways of making it satisfying for people to work for longer.
Not everyone will be able to do so for health and other reasons, and there are many tasks that, with the best will in the world, cannot be done by elderly people.
You can’t expect a 70-year-old to deliver pizzas at 10 o’clock at night. Working longer should be strictly voluntary and not to avoid destitution in old age.
But a lot of older people, including many who left their jobs in the pandemic, both want to contribute to society and would welcome the extra income.
Quite a lot is already going on to stop people leaving jobs in mid and late career. Many big firms have schemes to do this, and since young labour will become scarcer in a few years, they will have to rely on an older workforce. The Government worries about this for obvious reasons.
But if it does want to keep people in jobs there is one dead cert way. It is to end employers’ National Insurance Contributions for anyone post-state retirement age (employees already being exempt from paying National Insurance Contributions at that age). It probably wouldn’t cost anything in total and might even increase revenue as they would still be paying income tax. But I can’t see our present Chancellor pushing for this one.
Most of all, what’s needed is a change of mindset for anyone still in mid-career. Everyone is different, but the questions are the same. Do I really want to go on working in some form in my 70s and if so, how do I go about it?
Could I turn a hobby or part-time activity into a business? Are there new skills to learn? How do I make myself bullet-proof against an employer that may make me redundant tomorrow?
Some years ago, I was speaking at a retirement seminar. I asked those in the room to put their hands up if they would rather trust the Government or their employer to fund their pensions.
‘Wrong question,’ someone shouted. ‘You should only trust yourself.’ That’s surely a mantra that should apply to work in later life too.
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