Getting the work/death balance right

7 May 2009

Yesterday's paper from the National Institute of Economic and Social research, suggesting the projected explosion in government debt could be addressed by raising the state retirement age, resulted in a flurry of predictable "Work 'Til You Drop" headlines.

To those of us who view the current retirement age of 65 as soul-crushingly distant, such headlines might induce despair. But as the BBC's Economics Editor, Stephanie Flanders, points out, "there are no good options for cutting government debt, but extending all of our working lives could be the best of a bad lot". The NIESR reckons that extending our collective working lives by just one year would reduce the national debt by 20% of GDP over 30 years. Put in those terms, raising the pension age begins to look like an increasingly attractive option for a cash-strapped Exchequer.

Hefty increases to the state pension age have already been factored into existing legislation. The pension age for women will increase from 60 to 65 over the next 10 years, and there will be a further increase for everyone, from 65 to 68, between 2023 and 2046.

Back in 2002, the former Minister for Welfare Reform, Frank Field, pointed out that if the average length of retirement when the current state pension was introduced in 1948 had been maintained, the state pension age would now be over 74. Around the same time, the then Secretary of State for Work and Pensions, one Alistair Darling, was warning that growing life expectancy was placing an intolerable strain on the pension system. It was not feasible, he pointed out, for a forty year working life to provide enough cash to sustain someone through a retirement of thirty years or more.

Mr Darling may draw some comfort from the findings of Cambridge University geneticist, Aubrey De Grey. He's perhaps at the slightly wacky end of the spectrum, but if he's right, even raising the retirement age to 100 would leave some of us enjoying 900 years of retirement. Presumably he's ploughing his savings into manufacturers of colostomy bags and walk-in showers as we speak…