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There were lots of other disturbing issues, including the fact that the cost of financing the UK’s national debt was the third highest in the developed world, with only New Zealand and Iceland paying a higher rate of interest, and that the cost of reaching net zero would be £803bn.
So what’s to be done? It’s hugely complex, but stripped down there are really only four ways the black hole of pension liabilities can be filled.
There are obvious objections to the first two. The Government has given an “ironclad commitment to the triple lock” for the life of this Parliament. Given the growing numbers of older voters, it will be difficult for the major parties not to renew the commitment at the next general election.
Auto-enrolment
That leaves private pensions and a higher retirement age. There has been a huge focus on private pensions recently following the introduction of auto enrolment in 2012 by the coalition government. The legislation had been passed by Labour in 2008, so this is a rare cross-party policy.
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There is no question that auto-enrolment has been a success. The number of people in workplace schemes is now a little under 18 million, up from 10 million in 2011. The proportion of private sector workers in a scheme is now 86 per cent, almost as high as participation in the public sector.
There are no simple answers here. The Institute for Fiscal Studies reckons that 30 to 40 per cent of people saving in company pension schemes will not have enough for a comfortable retirement. But the majority of people approaching retirement age own their homes outright, so they may feel able to bump up their pensions by downsizing.
State retirement age
A common sense conclusion would be that most people should find ways of bumping up their pension contributions, certainly to the level matched by their employer, and that companies should pitch in more too. But the increases should be phased in a sensitive way, because the last thing you want to happen is for employment to fall as a result of the rising cost of hiring more people.
There has been the particular issue of the Waspi women – Women Against State Pension Inequality – but concerns run wider. Could a UK government realistically follow Denmark and push the pension age up to 70?
There is some evidence that people who retire later have better health and live longer. Of course, the relationship could be the other way round: healthier people choose to carry on working. But there does seem to be an association between keeping mentally and physically active and better general health in old age.
Need to know
The problem of people who would like to carry on working being made redundant and being unable to get another job is a really fascinating – and troubling – one. There is a lot of stuff going on to try to help people in this situation.
Besides, it can’t just be a challenge for employers; people have to learn to help themselves. It involves changes in attitudes, or at least being aware that job practices have shifted.
There are always lots of charities seeking older people with skills, but getting paid for something is tougher. A lot of people at that stage of their lives need to keep earning.
The business writer Charles Handy pioneered the idea of core workers and portfolio workers in what I think was his best book, The Age of Unreason, back at the end of the 1980s. His big idea was that in the first part of their careers they would work full-time for one employer, then later would branch out and build a portfolio of different clients. You didn’t look for a job; you looked for customers.
Anything that buffers the transition from full-time work to retirement must surely be both healthy and useful to wider society.
This is Armchair Economics with Hamish McRae, a subscriber-only newsletter from The i Paper. If you’d like to get this direct to your inbox, every single week, you can sign up here.
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