Labour MP Harry Cohen has argued in an article on epolitix.com[1] that raising the state pension age ‘discriminates against manual workers and people from poorer backgrounds’. In addition he claims that increasing longevity, which is the main spur to raising the state pension age from 65 to 68 by 2046, is not inevitable. Mr Cohen in fact insinuates conspiratorial motives within the actuarial profession. This is surely far-fetched; indeed actuarial estimates have frequently underestimated increases in longevity. Nevertheless, his criticisms do raise some important questions.

His main point is that because manual and low-income workers tend to suffer more from ill-health and live shorter lives, raising the state pension age means that they have to wait longer before receiving their state pension, and will ultimately receive less because, to put it bluntly, they will die sooner.

What we do know is that average life expectancy figures mask significant variation between poor and affluent areas[2]. And we know that healthy life expectancy seems to be increasing at a slower rate to life expectancy in general – and that health inequalities are contributing to this problem[3].

Yet the argument in favour of raising the state pension age is strong. Firstly, maintaining intergenerational fairness suggests that future generations should spend around the same proportion of their lives in retirement as we today – the planned pension age increases allow for this. And secondly, in a contribution-based system, there has to be a uniform set of rules governing when people are entitled to stop contributing and become beneficiaries – and those rules must be centred on a single pension age.

Furthermore, while the eligibility age for Pension Credit is rising to 65 by 2020 in line with the female state pension age, the Pensions Commission did not recommend increasing it further alongside the equalised pension age. Given also that Pension Credit must by law increase with average earnings, it should continue to provide a safety net for those older people just below state pension age who are unable to provide for themselves through employment.

Another thing we know is that good work is good for many older people. It helps them to feel that they have a role in society, and can mitigate the sense of isolation which can accompany the ageing process[4]. Enabling older working was a key part of a suite of reforms designed by the Pensions Commission to engineer a sustainable pensions settlement. Our challenge, therefore, is enable the right types of work so that older people can benefit from employment for longer. Harry Cohen argues that the recession may lead to further inequality among pensioners. Equally, it could be viewed as an opportunity to put new forms of employment for older generations at the heart of our plans for recovery.

Alongside this, we have to maintain that health inequalities are not an excuse for putting off pension reform. Yet it is the case that increasing the state pension age provides for an even firmer argument for more and stronger initiatives to tackle these inequalities. We have to continue to tackle health inequalities so that increasing longevity means the same thing for everyone. And a final wish: it seems inconceivable that an increase in state pension age can occur without the abolition of the default retirement age.

Craig Berry
 
References
 1. Cohen, H (2010) ‘Raising Pension Age “discriminates against manual workers”’, ePolitix, available at www.epolitix.com/latestnews/article-detail/newsarticle/raising-pension-age-discriminates-against-manual-workers/?no_cache=1
 2. Chartered Society of Physiotherapy (2006) ‘“Stop poorer dying younger” say physios’, Press Release 20/6/06, available at www.csp.org.uk/director/press/pressreleases.cfm?item_id=ECD760F7B81C8A42A543F572E3EBDF8F. Also see ILC-UK Blog http://blog.ilcuk.org.uk/2010/02/22/%e2%80%9ccould-do-better%e2%80%9d-%e2%80%93-the-verdict-on-health-inequalities-in-england
 3.  Mayhew, L. (2009) Increasing longevity and the economic value of healthy ageing and working longer, Cass Business School, available at www.hmg.gov.uk/media/33715/economicsofageing.pdf
 4. McCormick, J. (2009) Getting on: Well-being in later life, IPPR, available at www.ippr.org.uk/publicationsandreports/publication.asp?id=719