As successive Governments have cut the state pension as part of their austerity policies, they have been left with the dilemma of how to cope with the inequalities such cuts build into society.
Cuts to the state pension have not targeted how much is paid out – but the age at which the pension will be paid has been steadily increased over recent years. There is an inherent unfairness in this policy. As you go through your working life, you make certain assumptions about your pension based on the arrangements while you are working. You may work part-time or forego paying into a private pension because you know that you will be able to stop work at 60 or 65 and draw you state pension. Once the rules change and you find out that you will not be able to draw your state pension until you are 67, it is too far into your working life to be able to change those decisions and take different ones to protect your level of income in your older age.
There is also inherent discrimination. Women earn less than men. Women work part-time more often than men do, and most part-time workers are women. Women work in lower grade jobs and have less seniority than men (not least because of career breaks to have and care for children). Women are therefore less likely to build up a private pension and they rely more on the state pension.
Some people point to the fact that women live longer than men and point out that they receive their pensions, therefore, over a greater number of years: overall, they get more money than men, because they draw their pensions for longer. It can also be thought of the other way round: older women rely more on their pensions than older men.
Because women tend to work in lower grade service jobs, it is harder for them to go on working into old age than it is for higher paid men. It’s easy enough for most desk-bound male bankers to work (and play their gold and drink their claret) up to (or past) the age of 70. You can run a global communications business in your mid-80s, apparently (though this is on the strength of indulging in a bit of funny business on the way). On the other hand, many 65 year old women find it harder to cope with demanding NHS and social services care jobs, or run round after primary school children – at least on a full-time basis.
Keeping pensions low (or, at least, keeping projected public spending on pensions low) has a downside for the ardent capitalist. Retired people form a large proportion of the population, and they are an important group of consumers. Keep their incomes low, and they will not be able to buy much by way of goods and services – which is not good news at a time when lack of purchasing power in the population is keeping demand low and the economy correspondingly sluggish.
The Work and Pension Select Committee of MPs has been looking at this problem and thinking about how to help women born in the 1950s – the generation of women who have been hit hardest by seeing pension ages rise as they near retirement and can no longer adjust their personal financial planning. Unfortunately, they haven’t found any acceptable answers. All they have come up with is a vague proposal to get these women choose to draw their pension earlier if they want – but to draw a reduced sum, so they would still get the same money in total. This is hardly an improvement. Women who need to live on their pension from the age at which they thought they were going to receive it won’t be helped by being asked to live on less – certainly not when the same MPs who couldn’t come up with a better idea are also cutting public services and welfare benefits.
Labour MP Frank Field, who chairs the Select Committee, has said that he hopes the Committee’s report will open up a debate. Perhaps a public debate will come up with some better ideas – such as a proposal that MPs like Frank Field who are so keen on low pensions should try living on one, so that other people, with better ideas about how to run society so that it can afford to pay decent pensions, can become MPs instead. It’s nothing personal, Frank – just an idea. Perhaps it will spark a debate.
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