Sam Dunn: Working for longer will be fairer in the end
Critics of the reforms ignore the cost of our increased life expectancy
Sunday 28 May 2006
Boy, is there some way to go. Amid the excitement that greeted the Government's blueprint for our retirement, it was easy to forget that we're only at the White Paper stage and that a long consultation period lies ahead.
If - and it's a big if - the proposed changes (see page 18) pass the Treasury's "affordability" test and garner cross-party political support, they probably won't be introduced for at least another seven years.
One of the most eye-catching proposals - raising the state pension age to 68 - won't apply until 2046.
What happens in the meantime is anybody's guess. Successive governments - red, blue or yellow - could cause another rumpus and scrap it all in favour of something else as yet undreamt of.
But, fingers crossed, they won't. The White Paper contains much to stop the rot caused by millions of Britons failing to save for their old age.
Although many parts of the legislation have yet to be fully developed, the right building blocks are in place.
For those workers without company pension schemes, the new national saver scheme "personal accounts" should bring real benefits. Individuals will be forced to ask to opt out of the scheme, which should go a long way to reversing the apathy that afflicts too many low and middle-income earners.
The simplification of the overwrought state second pension should lead to a flat-rate top-up to help those who need it most, while linking the basic pension to average earnings will let the elderly share in the prosperity of the nation.
Slashing the number of years they have to work to qualify for the full basic state pension will also help to create a much fairer deal for women (and male carers) whose commitments to children or to the sick or elderly prevent them from taking paid work.
There's been much grumbling about the proposal to introduce a new retirement age of 68 by 2044, which will affect anybody aged 27 or under.
Figures from the Department for Work and Pensions suggest that, at present, anybody earning a wage of £23,000 and due to retire in 2050 with no private pension savings could expect to get a weekly state pension of £136 (at today's prices) at the age of 65.
Under the new package, if the same person were to retire at 68, the basic pension would rise only to £139, because of a fall in the value of the means-tested pension credit. However, since the individual would have been "softly compelled" to save into a personal account, the DWP says their weekly income would in fact amount to £219.
These critics who balk at raising the age of retirement are ignoring the cost of our increased life expectancy (set to reach 89 for men by 2050, and the early 90s for women). In any case, people will still be able to retire much earlier than 68, as long as they make their own private provision.
Not everyone will be able to do so, but there will be more than enough flexibility in this new regime to allow much better provision all round.
- 1 Revolutionary lost Caravaggio painting 'Mary Magdalen in Ecstasy' identified
- 2 McKamey Manor: This 'extreme' haunted house is the stuff of nightmares
- 3 Russell Brand says he will 'probably' give up acting to focus on his revolution
- 4 Watch what happened when food critics were unknowingly served McDonald's
- 5 David Beckham's Haig Club whisky is exactly what’s wrong with the Highlands
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
Poppy Appeal 2014: This is why I won't be wearing a red poppy this year
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village