Employment key to tackling pensions crisis
The Government can afford to maintain the state pension age at 65 provided it meets its target of 80 per cent of people of working age in paid jobs.
This is the finding of a new TUC report, which says pensions at 65 are affordable even if they become more generous.
And it is warning that raising the state pension age will force poorer people with the shortest life expectancy to work longer.
Those with private or occupational arrangements are far more likely to be able to retire before a new higher state pension age, the report says.
The independent Pensions Commission, chaired by Adair Turner, will publish its final report recommending changes to the pensions system at the end of November.
Ideas being considered to help solve the pensions crisis include compulsory pensions contributions, and raising the state pension age.
But in its report The Eighty Per Cent Solution the TUC says raising the state pension age has become a “quick fix solution” for lobby groups concerned by the dependency ratio – the size of the retired population compared to the size of the working age population.
At the beginning of the 20th Century for every person aged over 65 there were 20 people younger than 65, compared to six now and four by 2051.
Despite this, the TUC says if the Government meets its target of getting eight in ten of the working age population into paid jobs – up from its current rate of seven in ten – together with rising prosperity this can support a growing elderly population.
To achieve this, one million extra jobs need to be created by 2015, two million by 2024 and three million by 2042.
The report acknowledges the challenge presented by these targets, but says that if the UK repeats the performance of the last five years it would “comfortably” meet the target.
TUC general secretary Brendan Barber said: “We cannot ignore the fact that people are living longer and the number of pensioners will continue to grow.
“But there is an alternative to a ‘work-til-you-drop’ rise in the pension age, and that is to help those below the pension age get a job and make a full economic contribution so that there are more people in work under 65 paying taxes and creating wealth.
“It’s perhaps not obvious, but the best way of paying for better pensions is to get the economy working even better. And best of all, we do not need to do this overnight, we have a generation in which to get this right.”
Regional policies to boost employment, helping sick and disabled people into paid employment, flexible working, and helping many of the 50 plus, mainly former manual workers, back into work would be required to boost employment.
The TUC supports an end to compulsory retirement ages, but also opposes making people work beyond 65 should they not wish to do so.
