The current UK retirement age is 65 for men and 63 and 9 months for women. Previously, the age for women was 60 but it’s gradually being raised to 65 in the interest of gender equality. This combined with women having a longer average life expectancy than men has contributed to the change. However, lately there has been calls to raise the retirement age to 70 for both men and women. So what are the arguments for and against doing this?
An Ageing Population Requires Later Retirement
The World Economic Forum (WEF) has suggested that the age people should stop working in wealthy countries – such as the UK – is 70 years old. This is due to a larger amount of the population becoming older than the current age of 65, requiring an increase in the amount of public money spent on providing state pensions.
The UK has already set out plans that are reflective of this advice, with the age of retirement due to raise to 68 by 2048. Furthermore, the WEF has predicted that the current pension schemes will not supply a sufficient retirement funds for future workers by the time they are 65. By increasing the time they will need to work there is more time for the fund to mature.
Raising it Higher Sets a Bad Precedent
An opposing argument to raising the retirement age is that it will be the beginning of forcing future generations to work longer and longer into their lives. There is some suggestion that this could ultimately culminate in their being no formal retirement age, putting lower earners in a position where they will never be able to stop working. There is yet to be definitive answer on whether or not this is an inevitable outcome, but the concern is genuine.
With the reduction in wages and rising cost in living, the likelihood of being able to afford a worthwhile retirement in the future will be much lower than it was for the generations that have come before. Additionally, many of the jobs that the younger generation are currently in are low quality – likely zero hour contract – jobs that do not offer pension benefits.
Living Longer Has an Impact
One of the most contentious subjects in the debate about the increase of retirement age is the fact that people now live longer than they did previously. This is largely down to the rapid improvement in medical care over just a few decades. Whether that means that people will stay healthy enough to work for longer is likely going to be down to the health of the individual. It will also be effected by whether or not the NHS will still be financially capable to provide quality care to more elderly people.
An increased life expectancy may mean people will have more years to enjoy retirement, but it also requires you to have enough money saved to last the duration of it. This leaves two scenarios:
- Increasing the state pension age reduces the amount of time the money needs to last and decrease the amount of funding needed.
- Leaving the state pension age the same is possibly fairer for younger generations, but potentially more costly.
Whether one or the other is a worthy trade-off is a hot topic of debate and one that will be at the forefront of political policy for years to come.
