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POLITICS MATTERS: It’s time for an urgent rethink on pension proposals

By David Stewart

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Retirement age could be changing.
Retirement age could be changing.

Lloyd George’s 1909 People’s Budget provided for the first National Old Age Pension. The state pension has been with us ever since then and for many facing retirement, it is their only or main source of income.

The prospects of the state retirement age rising to 71 as quoted in recent press articles would bring misery to thousands of people in the Highlands and Islands. The National Pensioners Convention (NPC), said that the proposal “in no way reflects the harsh reality of getting older in the UK”.

Who will it hit? Those in their early 50s and younger. It would mean a miserable retirement for many as well as adding pressure to our hard-pressed health and social care services.

The proposals favour higher income groups. Although the number living longer has increased, unfortunately so has the growing numbers living with ill-health, and therefore not able to work. We know from pensions experts, such as former government minister, Ros Altmann, that only the top 10 per cent of income groups stay healthy into their early-70s.

For Westminster to cut costs by making ill employees wait longer for their state pension would be to favour the better off at the cost of the poorer sections of society. Raising the pension age to 71 is frankly an attack on the poor and those of us living in the Highlands, where heating costs are higher. There is no evidence of joined-up thinking by UK government. The NHS, our care sector and our social services are not ready nor geared up for the change.

A report by the Pensions and Lifetime Savings Association painted a bleak picture of how much income you need in retirement. For a ‘moderate lifestyle,’ a single person would need £31,300 and couples £43,100.

A moderate lifestyle is defined by the report as allowing one foreign holiday a year and the ability to eat out a few times a month.

A ‘comfortable lifestyle’ would require £43,100 for a single person and £59,000 for a couple. Comfortable is defined as a lifestyle that allows you to be more spontaneous with your money, with a foreign holiday and several UK mini-breaks a year.

The current pensions framework has a built-in bias against women, according to a recent report by the Pensions Policy Institute. They argue that on average women would need to work for an extra 19 years to retire with the same pension savings as men. Their research found that women retiring at 67 – the new UK state pension age from 2026 – will have an average of £69,000 in their pension pot, compared to £205,000 for men. There are a number of reasons for this disparity, including career gaps, caring responsibilities, childcare costs and lower earnings.

However, women tend to live longer than men, on average for about seven years, thus meaning their retirement pots need to last longer.

The NPC is calling for the next scheduled retirement age increase to be shelved, with its “68 is too late” campaign. Research by Unite the Union found that a staggering 86 per cent of health workers do not believe they can continue in their current roles beyond the age of 66 because of the strain on their mental health. Of the same group, 83 per cent could not physically continue in their roles beyond the same age.

The UK is facing a pension and retirement meltdown. Thousands of workers from the Highlands and beyond will be forced out of employment due to the physical and mental health demands of their work, but will be far too young to receive the state pension.

The UK government needs to urgently rethink the proposals which force people to work longer. Otherwise, people will face the impossible dilemma of being too old to work and too young to retire.

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