Working our way out of a pensions problem
Workers have found their own way to solve the pensions problem. Let down by employers, investment managers and government they have decided the best way to ensure a prosperous old age is to keep on working.
If one cause of the pension problem is that people are living longer then it is reasonable that one solution is to work longer. After decades when early retirement was a personal objective and corporate policy, employees are now choosing to work beyond the conventional retirements dates of 65 for men and 60 for women.
UK government figures show 1.3m people above those ages are still working. Not surprisingly, this is the fastest growing sector of the workforce but it is also one of the most productive. A change of attitude by employers now appreciates that many people of this age not only have experience but also bring old-fashioned values to their job.
Companies belatedly appreciated the “old” as a consumer market: even more belatedly they are seeing them as key workers. They should appreciate that many people not only need to work after conventional retirement dates, but want to.
The fact is, of course, that 60 or 65 is no longer old. A generation ago a 60-year-old man might have been working for 45 years but was within five years of death. Now he has probably worked for 40 years but has nearly 30 years ahead of him. As with all decision-making, employers need to consider the future rather than the past: allowing staff to work for part of those extra years leaves them with a full retirement and a higher pension and also gives the company a more efficient workforce.
Employees need to consider flexible employment schemes for older people. Working 46 weeks a year or five days a week may not suit a generation that wants to spend its pensions and which values time as much as money.
But everyone, from pension trustees and employers as well as employees, should stop thinking of 60 and 65 being retirement age. Increased longevity means those dates must be delayed. Lord Turner, when pensions commissioner, recommended the government adopt a common retirement age of 68 by 2050 – but by then, 68 will look as young as 65 does now.
If government is not prepared to be brave, companies should take the lead. Who knows, the public sector might even adjust its pensions and follow.
