Fairness needed in pension changes
WE ARE consistently told, throughout our working life, to ‘plan for the future’ and to put money away for our retirement.
After a lifetime of pension contributions, many people are glad to retire, whether that means a well-earned rest, or a whole set of new activities. However, money is often very tight for older people. Pensions have not kept pace with earnings, and those who have worked in low-paid jobs, or have taken time out of the workplace to bring up children, often find themselves struggling financially after they retire.
With rising life expectancy and an aging population, most of us accept that we’ll have to work longer in the years ahead. However, with time to save and plan for retirement, this is a manageable process.
But for five million people in the UK, the goalposts have been moved very suddenly.
Quite a few years ago, steps were put in place to equalise the pension age for men and women, and to raise the pension age for both men and women to 66. In principle, I have no problem with equalising the pension age, and no objection to raising it in line with life expectancy.
However, what is critically important is that people have time to adjust to the changes, and time to save for the change in circumstances.
Now the UK Government has brought forward plans to accelerate the timetable, to equalise the state pension age at 65 by November 2018, and raise it to 66 by April 2020, a full six years earlier than originally envisaged and against the recommendations of the Pension Commission that any changes should be introduced over at least 15 years.
Around 300,000 women who were born in 1953 and 1954 will be particularly badly affected by these changes, with some having to work up to two years more than they expected. Quite a number of local women affected have already been in touch with me.
Their biggest concern is that the goalposts have shifted once again for them, and that, crucially, they have no time to adjust.
Many people, as they approach retirement, have to contend with health problems, or take on caring responsibilities for elderly parents or grandchildren.
Many people do careful calculations to work out if they can afford to reduce their paid working hours. For women born in 1953 and 1954, the options are now significantly fewer, and they now have a gap in their pensions that needs to be plugged. It’s just inherently unfair that one group of women is being asked to carry the burden of cuts to the pensions budget.
I’m firmly of the view that we need Scottish solutions to the pensions challenge. Sadly, life expectancy in Scotland is still one of the lowest in Europe and though we are catching up, we still lag behind the UK as a whole.
This means we need to think carefully about the retirement age, and set it at a level that’s fair to pensioners who have paid contributions, affordable, and sustainable.
We also need to improve public health and life expectancy in some of Scotland’s most deprived areas, to ensure that Scottish men and women of pensionable age can plan for and look forward to a comfortable, healthy and enjoyable retirement.
We need a solution to our pension problems that is fair for this generation, and the next.