Last week we considered the drastic effects of the proposed changes to a single tier pension, which will bring all State pensioners down to a welfare level pension, however the matter gets much worse than this when you take into account the changes to retirement age that are also being put into effect.
Pension age is being steadily increased from 2021 and by 2051 it will have reached age 70 or higher, which will have a dramatic effect on the quality of retirement and also the numbers able to retire at all.
The population projections carried out by the Office of National Statistics show that the 65 and over population in the UK will have reached 20 million by then, however the age 70 and over is shown at only 16 million. This means that one in five, some four million individuals will see no retirement at all.
This is the social cost of the attempts to save money on pension expenditure, which in real terms at the single tier level amounts to some £30bn. Is this saving worth the cost in human terms and are you prepared to make this sacrifice to keep an outdated system alive?
Of course the position is presented that we are all living longer for 20 years or more from age 65 and therefore can afford to work for a further 5 years and this appears to be blindly accepted by all the experts, but not supported by the population facts.
Life expectancy is the point at which half the population have survived, that is you have an even chance of living that long, however current and projected population totals have reached this halfway point by age 75, only 10 years after 65. Also medical reports suggest that the quality of life deteriorates very rapidly after 75, with some form of disability occurring after age 77.
Ageing is slowing down, mortality rates are reducing, but in practice this is not occurring at the high rates being projected, particularly from age 70 on, in fact the present position may not change that much in the next 20 to 40 years. The over 65 numbers are increasing rapidly but mainly due to changes that have been occurring for the past 40 years from birth to 65, which are slowly moving into retirement.
The real problem is the pay as you go State pension scheme and the increasing reliance on welfare benefits combined with the increasing numbers over 65 compared to the numbers in work, which are stabilising out. At present there are three people in work for each retired, this ratio is expected to drop to two or less.
Those in work will no longer be able to support the children, elderly and disabled and the system is in danger of collapsing, which is already starting to occur in parts of Europe. This is the real problem in pensions and the only solution is for each in work to put money aside for their own retirement future and not someone already there, who you don't even know!
Such self sufficiency is just common sense, which is practised by most people in work, who pay off their mortgage over their working lives, put something aside for their children and a rainy day and have been paying National Insurance contributions for their retirement future, unemployment or hardship over their working lives.
However this appears to have been lost or forgotten by the State and successive Governments, who are more concerned with income and expenditure, rules and regulations, human rights and the welfare of those who have no wish or intention to work.
The backbone of the nation, its working population appear forgotten, a source of taxation and income, believed to be limitless.
It is not yet too late for a change, but time is running out; work, retirement and quality of living need to be put back into perspective, given the attention it deserves and its importance recognised. All should have the opportunity to work and not left to rot on the scrap heap, wasting valuable resources and expensive education.
Such common sense should also be applied to pension savings, whether through NI or other contributions, they belong to the individual concerned as personal savings and are not a source of income to be spent on others or wasted, but invested and allowed to grow for that individual's sole benefit.
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