Sunday, 17 June 2012
Should We Abolish The Idea of Retirement?
On the 28th July, a computer will begin to pay £117.07 per week, in arrears, into my bank account. This is my State Pension, kicking in nine days after my 65th Birthday.
Another computer will take back 20% of my pension in tax, since my personal allowance has already been used up against an occupational pension. So I will be left with £93.66 a week which I didn't have before. Thank you very much. But what am I supposed to make of this?
There was a time when men (real men) worked continuously from 14 to 65 and then, one day, just stopped working and shortly thereafter died. In this short period in which they had no earnings from employment,the Old Age Pension kept them going until it was all over.
We all know that things are no longer like this but,in some respects, we have not adjusted.
Apart from a few years of childhood and a few years (or less if we are lucky) of senility, I favour a culture in which there is an expectation that everyone should be economically productive at all stages of their life - when they are still in school, when they are in university, when they are over 60 and over 70.
I think I had my first Saturday job, earning money, when I was 11. I hope to have my last Saturday job in my eighties and just hope I don't live into my nineties.
All along the way, there should be a cultural expectation that everyone insures against really bad luck which renders them unable to work productively at all. Not only an expectation: the State should make life time membership of lifetime insurance schemes compulsory. And it does, though it is not transparent enough about the relationship between Contributions and Benefits: to be honest, I have little idea how much of what the State offers me by way of Benefits is based on Contributions that I have made to a Scheme and how much comes from taxing other people to pay me Benefits (or vice versa).
All along the way, there needs to be a cultural understanding that ability to work productively does decline: that the airline pilot may one day have to take a desk job at lower pay and then an even less demanding part time job at less than a living wage. In these circumstances, no one has any excuse not to try to plan their own personal future and to make provision to ensure themselves an adequate income at all stages of their lives. In other words,they need to save and invest. The State can assist here too by setting a minimum level of foresight.
But it should also encourage the notion that providing for the future can be done more modestly if there is an intention to keep working into the future. In some cases this will not be credible: if you smoke, drink too much, are obese and take no exercise - then there is no credible intention to keep working. You won't be up to it when the time comes - and you know it.
I don't look on my State Pension as a Retirement Pension. It simply provides me with some reassurance that I don't have to keep working as hard as I have done previously and that if I find myself getting too tired or too muddle headed or too sick, then I can ease off and still have some income. Of course, in reality my occupational pension is what provides this reassurance.
What is shocking is the thought that for many people £100 per week or so from the State is the core of what they are going to have to live on. Somewhere along the line, neither the state nor individuals were planning for the future.