Ros Altmann on proposals to increase the SPA and how to support older workers

We are already seeing problems from the sharp increase in women’s SPA and further increases for men and women are currently underway. While auto-enrolment will help those in work save for retirement over the long term, older workers will not feel the full benefit of this legislation when it comes to pension savings and many will be almost entirely dependent on state support for many years to come.

Employers must also consider the relationship between the SPA and employees who will have to work for longer as a result:

Working longer can be beneficial for many people’s health and wellbeing, but not all.  Policy must encourage a longer working life, but not force it on people who cannot cope. A significant minority of the population, many of whom have had hard physical manual labour careers, will not be well enough to carry on working into their 70s and beyond.

Carers in the workforce, as well as those they care for, will also suffer if they have to wait many more years for the State Pension.  

Keeping more older people in work can boost the economy and cut public spending, but it should be their choice: Official estimates suggest increasing the average age at which people retire by just one year would add 1% to National Output (GDP).  Raising the SPA would also save significant sums in benefit spending as the population ages. But just forcing people to wait longer for their pension, regardless of their circumstances, is not a socially equitable welfare policy. Indeed, major State Pension Reform in 2016 was supposed to have made State Pensions affordable for the long-term.

More than 1 million over-50s want to work but can’t find a job – let’s help them first: Age discrimination is still embedded in the labour market.  Currently over 1 million people below SPA cannot find a job. Increasing support for them, including retraining programmes and employer incentives, should be the first priority. Only when work is readily available to all who want it before they reach current state pension ages, could further SPA rises be considered. Leaving more people languishing on ‘in-work’ benefits, when they have no prospect of finding the work they need, or are being forced to carry on when they are not fit enough to do so, denies them dignity and choice. Forcing people to work till they drop is not the mark of a civilised society – there must be room for choice.

We need to get away from the idea that there is one ‘magic age’ beyond which people won’t be expected to work: Chronological age is not a sufficient defining characteristic for the State Pension. Other factors should be used to determine eligibility, incorporating flexibility for individual differences in the qualification criteria.  Here are just three examples of how the system could be made more flexible:

Cost could be controlled by number of years of contributions to National Insurance. To qualify for a full State Pension requires just 35 years of National Insurance. This is nowhere near a full working life. Perhaps full State Pension should only paid to those with, say, 50 years on their record.

Allowing ongoing increases in State Pension for extra National Insurance years with no upper limit could also be considered, to help overcome the stark minimum age cut-off. People could be allowed to start drawing a reduced pension on health grounds or to recognise unpaid caring roles.

Or, perhaps as soon as someone has 50 years NI, they are entitled to a State Pension (regardless of chronological age), so those who started work earliest (usually the lower-paid) can retire earlier too.

Our State Pension is not generous, it offers only basic minimum support. Indeed the OECD shows the UK pays the lowest of all OECD countries. Making people wait longer and longer before they can receive any pension, compounds the current injustices whereby the system discriminates against those who have not attained a required age and can no longer work. Read the full CSJ Report.

The author is Ros Altmann.