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British Pension Crisis
By Steve Richards, The Canberra Times
October 18, 2004
Flicking through the television channels the other night I caught Sir Cliff Richard performing on Michael Parkinson's show. Sir Cliff seemed to be enjoying himself at the age of 63, releasing another album and no doubt preparing for another tour. The average retirement age in the United Kingdom is 62. He is rocking when most people are retiring.
Meanwhile, Parkinson is still working extensively in his late sixties, with a chat show here and a radio program there, enjoying himself as much as he was in his thirties.
They are unusual in their youthful exuberance. There is a pensions crisis in Britain as there is in most parts of the world because we live longer and retire earlier. Sir Cliff and Parky will have been watched by many who are younger than them, but who stopped working long ago.
In reality, Britain is better prepared than many countries, but is by no means immune from a situation where vast numbers stop earning incomes at a relatively young age. This week's government-commissioned report from Adair Turner on the future for pensions implies that radical policies are required to meet the inevitably severe shortfall in funding. Only a limited number of options are available to any government. One solution would be substantial rises in taxation to pay for higher pensions.
This will not happen. For both parties tax increases are out of the question. Even if a Labour Government dared to put up taxes in the future, a large increase in funding for pensions would be a low priority compared with the need to sustain high levels of funding for public services.
Instead, at some point soon a government will have to take a deep breath and introduce compulsory savings for a second pension. At the same time, the average age of retirement will have to rise above the tender age of 62.
This second measure is more complicated and challenging than it might seem.
Most people work long hours in unfulfilling jobs. It is one of the great sleeping issues of our time - not so much the balance between work and leisure, but the nature of work itself.
Some ministers tell me that those in their late fifties and early sixties who claim incapacity benefit are exhausted and run down by work, genuinely incapable of working any longer. In his speech recently, Prime Minister Tony Blair rightly called for a change of culture in the workplace, where the focus is too much on younger people and not enough on exploiting the talents of those with more experience.
Cliff Richard and Michael Parkinson are leading the way. But not all people have the option of continuing in work as rock stars and chat-show hosts.
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