Pension realities

When the Liberal government introduced the state pension in 1909 it offered an initial payment of five shillings a week (7s 6d for a married couple) to all retired workers aged over 70. It was known colloquially as the “Lord George”, because only a lord could be so generous – yet, in fact, the level of benefit had been deliberately set low to encourage people to make their own additional provision for retirement.

The pension was never meant to support someone throughout their final years but the expectation gradually grew over the decades that it should. The pension age was reduced to 65 in 1928 and then to 60 for women in 1948. Ever since, it has been creeping back towards 70. Men and women’s state pension age is now 66 and between 2026 and 2028 it will rise again to 67. It is now reported that Jeremy Hunt, the Chancellor, is to use his March Budget to accelerate a planned move to 68 by 2033, more than 10 years earlier than planned.

The British are remarkably sanguine about these developments. An attempt by Emmanuel Macron to increase the French pension age from 62 to 64 prompted a general strike last week. But for over-burdened Western welfare systems there seems to be little option. Campaigners say there is no justification for another increase in pension age but the alternative is unaffordable.

With 14 per cent of the population now aged over 70, sustaining such a large number by over-taxing a dwindling young population is unsustainable. This is especially problematic when more than five million people of working age are not in jobs and are therefore unlikely to be paying tax or are drawing benefits. The Government needs to prioritise getting them back to work.