Pension changes: retirement reinvigorated, or working until you drop?

It's about time the Government grasped the nettle on the retirement age. But it'll be a tough sell...

Last Updated: 31 Aug 2010

Fancy working until you're 70, or even beyond? That's a very real prospect for many, if the Government goes ahead with plans to scrap the default retirement age and (eventually) increase the state pension age to at least 70. The coalition wants to accelerate previous plans to push back the age at which we collect our gold watch - so it could go up to 66 as early as 2016, a full decade earlier than scheduled. This is partly about saving money, since pensions make up a huge chunk of the welfare bill. But there's also a good case that forcing people to retire at 65 is discriminatory and results in the unnecessary loss of some highly-skilled, perfectly capable people who actually want to work (and would benefit from doing so) - which can't be good for the economy...

Of course, it depends who you believe. The Government says it wants to 'reinvigorate retirement' by encouraging working people to save and allowing them to work longer. So it's launching a consultation about how quickly the Default Retirement Age can be scrapped altogether and the state pension age raised to 66, as well as looking at automatic enrolment in workplace pensions. 'People are living longer and healthier lives than ever,' Work and Pensions Minister Iain Duncan Smith said today. 'The last thing we want is to lose their talent and enthusiasm from the workplace due to an arbitrary age limit.' And since these limits were set at a time of very different life expectancies - now 77 for men and 81 for women - you might argue that these changes are long overdue.

However, the unions don't see it that way. They point out that life expectancy increases up the class scale - so this move would unfairly hit poorer and manual workers, who would be forced to spend a greater proportion of their life toiling away. 'The latest assault from the government is work until you drop,' said the RMT's ever-lovable Bob Crow (taking time out from his efforts to cripple the railway system). Labour's Yvette Cooper also claimed it was unfair on those in their fifties, who supposedly 'haven't got time to change their plans' (that’s some serious forward planning going on there).

And what about employers? Some use the DRA as a way to let older staff go and bring younger (usually cheaper) staff in - hence why the British Chambers of Commerce thinks scrapping it would 'damage businesses' ability to manage their workforce'. But the Employers Forum on Age, a pressure group, reckons that's misguided: it says firms 'should not fear the removal of the DRA', since many of their members who don't apply it have seen 'significant business benefits' (like a happier, more engaged, more qualified workforce).

It’s hard to dispute that the default retirement age is an anachronism. And with the Government desperate to slash the welfare bill, the state pension age is only going in one direction: up. So employers, like workers, need to get used to the idea and start planning ahead...

In today's bulletin:

Pension changes: retirement reinvigorated, or working until you drop?
High street sales still falling - despite the World Cup
Prime Minister ousted after tax fiasco (in Australia)
YouTube wins landmark $1bn Viacom case
Letters from Malawi: What is China doing here?

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