“People are living longer and healthier lives than ever.”
Iain Duncan Smith, work and pensions secretary, Daily Telegraph, 24 June 2010
There’s no money in the bank, so you all need to work till you drop. That’s not quite how the government would describe its plans to increase the state retirement age, but the move has already raised union hackles.
Back when the state pension was introduced in 1926, only a third of men were expected to live long enough to claim it. But now people are living much longer, Iain Duncan Smith said today, and so they need to work for longer.
The previous government planned to raise the state pension age to 66 from 2024, and to 68 by 2046.
But the new government indicates it wants to go further and faster. The pension age for men could increase from 65 to 66 in just six years’ time (later for women) and could go as high as 70 by the middle of the century.
The move has already angered unions, who say it would hit the least well-off the hardest. So how much has life expectancy increased, and who is feeling the benefit?
There’s little dispute that – on average – people are living longer and longer as living standards and medical care improve.
But within the headline statistics, there are considerable variations in life expectancy.
ONS figures for 2006-8 show the average 65-year-old man in plush Kensington and Chelsea could expect to live – and claim a state pension – for another 23.1 years. But in tougher Glasgow City, the figure was just 13.8 years. This gives those in the richer area nearly a decade more to enjoy bowling greens and time with the grandchildren than their Caledonian counterparts. There’s a similar difference for women in these areas, although females tend to live a bit longer than men from the same place.
There’s also a class divide when you look at healthy life expectancy – a measure of how many more “well” years someone is likely to have. A 65-year-old professional is expected to live around 6.4 years longer in good health than an unskilled worker, meaning they’re likely to have longer to enjoy their retirement.
This doesn’t make IDS wrong – ONS data shows both richer and poorer people are living longer than they used to. But the rich have seen their life expectancy increase by more than the poor, at least over the past few decades.
According to the most recent figures we could get, between 1972-76 and 2002-05 life expectancy for 65-year-old male non-manual workers increased by 4.8 years.
But for male manual workers, it increased by just 3.8 years – 12 months less in extra time. For women, both increases were smaller, but non-manual workers also got an extra year’s innings.
This assumes that everyone works up until state retirement age, which isn’t the case. Pensions minister Steve Webb pointed out today that many manual workers stopped working and started claiming benefits before 65. The government is also reviewing the wider benefits system, so this could be set for a squeeze, too.
Iain Duncan Smith is right to say that people are living longer and more healthily. With (or even without) the country’s finances under strain, this clearly makes the rising pension bill something the state needs to check it can afford.
But non-manual workers have benefited from a slightly greater increase in life expectancy than the working class. And raising the pension age across the board would seem to have a bigger impact on the poorest – delaying retirement hurts more when you’ve only got 10, rather than 20, years left to live.
Of course, these are all average figures – some poor people live until 100; some wealthy bankers die young. But with the government keen to be a “progressive coalition”, the gap between the rich and poor leaves it open to criticism from those who feel the poor are getting a tougher deal.