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Recent reports about people having to work longer before they retire show the importance of putting debates about pensions and income in old age much higher up the agenda and much earlier.
This week began with headlines talking about how we might need to keep working until we’re 71 by 2050 due to various demographic factors – basically too few working age people. The International Longevity Centre had done the number crunching and found that many western countries are ageing at a very rapid rate compared with other countries and that in the UK the state pension age would need to be 70 or 71 by 2050 compared with 66 now to maintain the status quo of the constant number of workers per state pensioner. In fact it thinks might need to be brought forward 10 years if factors such as time spent in full-time education are taken into account.
And that’s not to mention the impact of ill health which is severely affecting retention and recruitment. It’s easy to dismiss pensions stories when you’re young because there’s just too much else going on. Getting from day to day is hard at the moment, but the long-term picture for many who are now young is not promising. When younger people do think about pensions it tends to be very much in an ‘I’ll never be able to afford to retire’ kind of way.
A survey by PensionsBee this week indeed shows a growing divide between older and younger people when it comes to attitudes to pensions. There was a 7% increase in optimism about pensions among 55-64 year olds towards the end of last year, from 38% in September to 45% in December. Meanwhile, fewer said they felt pessimistic. Over 65s were even more positive in December, with over half (53%) feeling confident about their pension. However, pension concerns intensified between September and December 2023 for those under 55, with 57% admitting “quite negative” and “very negative” emotions about their pension – a 6% increase in negative sentiment over the period.
Our sister site workingwise.co.uk has done quite a bit on the gender pension gap – the gap in income for pensioners between males and females usually due to a collection of lifetime issues, from women getting lower pay and being more likely to take career breaks to doing more part-time working.
When we’ve spoken to women in their 40s there is a lot of fear about old age. Many don’t fully understand their pensions. A report out this week from the Department for Work and Pensions admits many people grapple with the complexity of the system and calls for better pension education, simplified pensions information from the government and pension education in schools.
At a recent Women and Equalities Committee on the cost of living crisis, one MP said she was getting more and more older women coming to her who were worried they would not be able to afford to retire. This tallies with workingwise.co.uk’s 2022 research on gendered ageism.
The Committee heard from the Chartered Institute for Personnel and Development [CIPD] who called for pension packages to be advertised on job adverts. That would give them more prominence and encourage both employers and employees to have them more front of mind. Often pensions stories get passed over when we are young and are directed more at older people. But by then it’s too late. We need to be more aware much earlier on about the need to save for the future, if, of course, we can save. Many pensions experts are calling for auto-enrolement to be extended to force people to save more because it is so easy to put things off and hope for the best.
Just as not everyone can afford to save, not everyone will be able to keep working, however, and that is why we need urgent work to boost the safety net as well as to promote good work that doesn’t have a significant detrimental effect on health. The Women and Equalities Committee also heard that insecurity and short-term contracts are rising. The longer term impact of that will be felt in the next decades until we do something to tackle it now.