10Feb14 - Linking SPA to Longevity - ILC-UK
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10Feb14 - Linking SPA to Longevity - ILC-UK

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Speaking during the Autumn Statement in December 2013, the Chancellor of the Exchequer, George Osborne MP, confirmed plans which would mean that people should spend a third of their adult lives in ...

Speaking during the Autumn Statement in December 2013, the Chancellor of the Exchequer, George Osborne MP, confirmed plans which would mean that people should spend a third of their adult lives in retirement.

The 2013 Draft Pensions Bill, currently going through the House of Lords, proposes five-year reviews of the State Pension Age (SPA) with the aim of maintaining the proportion of adult life spent in receipt of a state pension based on increasing life expectancy.

In the UK, reductions in mortality have been accompanied by increased life expectancies over the last century. Between 1911 to 2010, life expectancy in the UK has increased from 49.4 to 78.5 for men and from 53.1 to 82.4 for women. The Chancellor confirmed that the date when the state pension age rises to 68 will be brought forward to the mid-2030s - it had not been due to kick in until 2046 - and the state pension age could rise to 69 by the late 2040s.

A growing number of countries are beginning to link pension age with increases in life expectancy to address the financial impact of an ageing population. Across the OECD, countries are raising retirement ages as life expectancy increases. By 2050, the average state pension age will rise from 63 for men and 62 for women to almost 65 for both sexes. A number of countries in the European Union have linked pension benefits with life expectancy including Spain, Italy, Czech Republic, Denmark, Greece and the Netherlands.

It has been estimated that, from 2007 to 2032, the public expenditure on pensions and related benefits will rise from 4.7% of Gross Domestic Product (GDP) to 6.2%.
But whilst increasing the State Pension Age appears to be a logical step to addressing the financial challenges of an ageing population, the complex interplay of factors impacting on retirement and workforce participation cannot be ignored.

Our event considered some of these challenges such as:
How can increasing the State Pension Age be fair when significant numbers of poorer citizens will reach this age in ill-health (or not at all)?
Which groups lose out most by an increase in state pension age?
How can we respond to the fairness challenge?
The appropriateness of different measures of life expectancy (cohort life expectancy; period life expectancy; healthy life expectancy; disability free life expectancy).
Will increasing the State Pension Age reduce the dependency ratio and extend working lives?
What will be the fiscal impact if an increasing number older people find themselves unable to work and needing to access working age benefits?

At the event, we heared from the Minister for Pensions, Steve Webb MP; ILC-UK Research Fellow, Ben Franklin; Dr Craig Berry, ILC-UK Fellow and Research Fellow at the University of Sheffield; Camilla Williamson, Age UK’s Development and Support Manager, Knowledge Transfer; Professor John MacInnes, a social demographer and Professor of Sociology at the University of Edinburgh.

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10Feb14 - Linking SPA to Longevity - ILC-UK 10Feb14 - Linking SPA to Longevity - ILC-UK Presentation Transcript

  • Linking state pension age to longevity: Tackling the fairness challenge Monday 10th February 2014 This event is kindly supported by Age UK #SPAlongevity
  • Welcome Baroness Sally Greengross Chief Executive ILC-UK This event is kindly supported by Age UK #SPAlongevity
  • Ben Franklin Research Fellow ILC-UK This event is kindly supported by Age UK #SPAlongevity
  • Linking State Pension Age to Longevity The Challenge of Fairness Ben Franklin, International Longevity Centre – UK @ilcuk The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • What I’m going to cover  Demographic changes and the need for working beyond 65.  Health and informal caring as a barrier.  Inequalities in healthy life expectancy across England.  Continued uncertainty over future state pension age.  Raising SPA: just one part of the solution. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • The need for longer working lives…let’s start with a simple example The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • The need for longer working lives… The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • The need for longer working lives… The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • The need for longer working lives… The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • But…we have a problem The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • State pension age is not the only barrier…health The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • And informal caring can also result in people leaving the workforce… The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • There has been a consistent gap between life expectancy and healthy life expectancy The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • And there are sharp inequalities in healthy life expectancy across Local Authorities… The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • Inequalities…closer to home The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • And finally…uprating SPA raises prospect of a constantly moving target The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • Many thanks Ben Franklin Research Fellow International Longevity Centre - UK benfranklin@ilcuk.org.uk 02073400440 Twitter: @ilcuk The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • Steve Webb MP Minister of State Department for Work and Pensions This event is kindly supported by Age UK #SPAlongevity
  • Paul Kitson Partner PwC This event is kindly supported by Age UK #SPAlongevity
  • Professor John MacInnes Social Demographer and Professor of Sociology University of Edinburgh This event is kindly supported by Age UK #SPAlongevity
  • Population ageing and pension provision John MacInnes and Jeroen Spijker University of Edinburgh
  • The UK population is now the ‘youngest’ for 150 years in terms of years left Flexible Ageing © John MacInnes 2013
  • 1843 1848 1853 1858 1863 1868 1873 1878 1883 1888 1893 1898 1903 1908 1913 1918 1923 1928 1933 1938 1943 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013 2018 2023 2028 2033 2038 2043 2048 Pop 60/65+; RLE<15, GDP, annual % change 1841-2051 5 3 1 -1 -3 -5 60/65+ growth pop RLE<15 GDP growth
  • Results 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 % of population in age groups with RLE≤15yrs OADR adjusted for pension age Ratio * 100 % OADRs, prop. of the population at ages with RLE of ≤ 15 years and the Real Elderly Dependency Ratio. England and Wales 1950-2050. OADR REDR (RLE≤15yrs/employed) Source: Spijker, J. and J. MacInnes. Population ageing: the time-bomb that isn’t? British Medical Journal 2013;347:f6598
  • OADR and REDR 1958-2009 various countries Flexible Ageing © John MacInnes 2013
  • Background  The 65+ nowadays is the main force behind improving survival. Change in life expectancy (in years) in England and Wales between each decade Source: Spijker, J. and J. MacInnes. Population ageing: the time-bomb that isn’t? British Medical Journal 2013;347:f6598
  • Background Years Remaining life expectancy lived Men Women Year Statutory retirement age Men Women 1841-45 65 11.0 11.7 1881-85 65 10.6 11.6 1921-25 65 11.3 12.9 70 70 1961-65 65 12.0 15.5 65 60 2001-05 65 16.4 19.4 65 60 2011-15 65 18.9 21.4 65 60 2041-45 65 22.1 24.5 67 67 No pension support. Introduced in 1909 Q Have people in the three groups aged at the same rate if their remaining life expectancies are so different?
  • Camilla Williamson Programme Manager - Knowledge Transfer Age UK This event is kindly supported by Age UK #SPAlongevity
  • The impact of changes to the SPA on people in routine occupations and their thoughts and feelings on linking it to ALE Camilla Williamson Programme Manager – Knowledge Transfer, Age UK
  • Overview the research and why I undertook it • Research explored the impact of changes to the SPA on people in routine occupations and their thoughts and feelings on linking it to ALE • Pensions Bill 2011 and Age UK SPA campaign • Lack of qualitative data on people’s thoughts and feelings around SPA changes and linking SPA to ALE • Need for the voices of those likely to be most affected by change to be included in the policy making process
  • Data collection • Qualitative study carried out • Eight individuals in routine occupations, aged between 50 and SPA, and living in South West London, participated in one hour, face-to-face, semi-structured interviews. • Participants: Name Mike Pete Steve George Kate Crystal Devna Julie Age 50 52 57 53 58 53 53 52 Occupation Security Guard Self-Employed Carpenter Sales Assistant Customer Service Assistant Sales Adviser Sales Manager Cleaner and Shop Assistant Clerical Assistant
  • Kate, 58, Sales Adviser • State Pension “only source of income” in retirement. “I’ve never been able to put anything aside or…put into any sort of savings pot, looking forward to retirement” • “Ok so you started work at 15 and 3 months then you will retire at 60 and be given x, if you pay your dues, which I have done. And suddenly it all changes” • “If it was a company telling me that, you’d have redress”. • “My choice has been taken from me. My choice has gone. Stripped of my choice. And…basically lied to. I guess”. • “As I’m getting older…I’m tiring, I do have arthritis, I do – I am struggling now” • “Is it right and proper to ask someone with a much more physically demanding job to carry on doing that? With no option”
  • Pete, 52, Self-Employed Carpenter • “On the building site, the job would be too heavy for me, it’d be too much […] I’ve already had trouble with my back and stuff like that” • “I might end up, you know, stacking shelves or something at B&Q or something, just a part-time job or something. But not the work I’m doing now”. “It’d be too dangerous” • “[Raising the SPA] just takes away your dreams really, what you’ve worked for all these years” • “People have paid in and they’re entitled to when they’ve got it, see. That should be part of the equation really, that should be it. If you start work at 20 now and you’re working until 65, isn’t that enough years of paying in that you should be able to then claim something? […] That’s like anything else you do. If you’ve paid into something for that long, obviously, you’d expect something out of it, wouldn’t you?”
  • George, 53, Customer Service Assistant • “My job is very mundane, very boring, very routine”. “For me to work…in the same job would be soul destroying. Now, if I was working in my previous job that I was made redundant from, I’d be very happy, or in like a similar job” • “I applied for at least 1’000 jobs which I never, you know…I got very few replies, very few responses” • “I’ve tried getting to the management – erm...management scheme, you know, to train as a manager but I didn’t get anywhere. I think I’m the wrong age”. • “Because there’s no prospects with this organisation and it’s hard work, it’s really having a knock-on effect on my motivation and wellbeing cos I’m going nowhere…”
  • Julie, 52, Clerical Assistant • “I just started to think that I’m never going to be able to [retire]…I feel like I’m going to have to work till I die, I think”. “[I feel] erm, [slowly]..devastated. You know, erm…trapped basically. And a bit scared” • “There’s lots of people my age and they’re still working, so the jobs that they do must not be, umm…they can’t be like ours, I don’t think” • “A lot of people who work in our environment, they either have strokes or, umm, heart attacks when they retire and die. They don’t even get a lot of their pension. So I think that [SPA] should be based on your working environment, you know, rather than the general” • “You’ve got all this data, you know, so why do you compile all this data about people…if you’re just going to use a basic average all of the time?” • “You’ve got to break it down a lot more before you can start deciding that you’re going to take loads of money and time away from this person because you’ve fixed them to this bracket”.
  • Closing remarks • Strength of feeling about SPA changes • Significant impact of changes on this group, particularly in regard to: their ability to continue working, feeling trapped and stripped of choice, and the effect of changes on their aspirations for retirement • Participants’ shock at the idea of linking ALE more directly with SPA • Feeling that the average does not reflect differences in people’s circumstances, particularly in terms of health, employment and contributions • The importance of including the voices and experiences of those who are most affected by changes in the policy making process • The role of qualitative research
  • Thank you Camilla Williamson Programme Manager – Knowledge Transfer camilla.williamson@ageuk.org.uk
  • Dr Craig Berry Research Fellow University of Sheffield This event is kindly supported by Age UK #SPAlongevity
  • STATE PENSION AGE AND LIFE EXPECTANCY INEQUALITIES Craig Berry Sheffield Political Economy Research Institute University of Sheffield
  • Life expectancy inequalities  Issue neglected by policy-makers  Issue neglected by statisticians  The evidence we have is overwhelming  Not neglected by pensions industry  Huge evidence gap re disaggregated projections
  • Life expectancy at 65 by gender (years) Men Women Gap Gap change from 2011 2011 18.2 20.8 2.6 - 2016 19.6 21.9 2.3 -0.3 2028 21.5 23.9 2.4 -0.2 England and Wales only. Based on latest available ONS data: 2009/11 interim life tables and 2010based period and cohort life expectancy tables. See http://www.tuc.org.uk/sites/default/files/tucfiles/State%20Pension%20Age.pdf
  • Male life expectancy at 65 by class (years) Routine & manual 2006 2016 2028 Managerial & professional Gap Gap change from 2006 15.8 17.4 18.4 20.2 2.6 2.8 +0.2 19.3 22.4 3.1 +0.5 Female life expectancy at 65 by class (years) Routine & manual Managerial & professional Gap Gap change from 2006 2006 2016 18.9 19.8 21.3 22.8 2.4 3.0 +0.6 2028 20.8 24.6 3.8 +1.4 England and Wales only. 2006 results based on latest available ONS data: 2002/06 life expectancy by NS-SEC class. 2016 and 2028 results are TUC estimates based on average annual increase for NS-SEC group 1992/96-2002/06, adjusted by expected change in average annual increase for all England and Wales population between 1996-2006 and 2006-2028 (derived from ONS 2010-based period and cohort life expectancy tables). See http://www.tuc.org.uk/sites/default/files/tucfiles/State%20Pension%20Age.pdf
  • Male life expectancy at 65 by geography (years) 2011 2028 2028 Gap to East Dorset (change from 2011) Manchester 15.4 16.9 7.1 (+1.6) Corby 16.5 18.2 5.8 (+1.4) M’brough 16.5 18.4 5.6 (+1.2) Female life expectancy at 65 by geography (years) 2011 2028 2028 Gap to East Dorset (change from 2011) Manchester 18.8 20.3 7.7 (+2.9) Corby 18.6 19.1 9 (+4.9) M’brough 19 20.7 7.4 (+2.7) 2011 results based on latest available ONS data: 2009/11 life expectancy by local area. 2016 and 2028 results are TUC estimates based on average annual increase for each local 2000/02-2009/11, adjusted by expected change in average annual increase for all England population between 2002-2011 and 2011-2028 (derived from ONS 2010-based period and cohort life expectancy tables). Adapted from http://www.tuc.org.uk/sites/default/files/tucfiles/State%20Pension%20Age.pdf
  • Impact on SP outcomes  Across all groups, inequality in lifetime receipt of state pension will increase  By 2028, women receive 12.3% more than men  White-collar men receive 17.6% more than blue-collar, 20.4% for women  East Dorset pensioners receive around 50% more than Manchester men and Corby women See http://www.tuc.org.uk/sites/default/files/tucfiles/State%20Pension%20Age.pdf
  • State pension age  Pensions Bill confirms SPA rise to 67 by 2028, but based on 2010 average life expectancy tables that have already been revised down  Raising SPA based on average life expectancy exacerbates enormous inequality  Autumn statement 2013 seems to contradict Pensions Bill; if nothing else, it pre-empts ‘independent’ review and even GAD’s formulaic approach
  • SPA compared  OECD average SPA in 2050 will be 65.6, UK will by 68 in mid-2030s  Only Ireland has accelerated SPA as quickly  UK is more unequal than most other European countries  SPA needs to rise but why so quickly – does the govt believe in its own economic strategy?
  • Independent commission  Need a lot more data, especially on socio-     economic group and/or income distribution Guided by average life expectancy but also life expectancy of lowest income decile Must consider evidence on working in later life (conventional wisdom is wrong, skewed by lower female SPA) Employee and employer representatives Less frequent than every parliament
  • Linking state pension age to longevity: Tackling the fairness challenge Monday 10th February 2014 This event is kindly supported by Age UK #SPAlongevity