ROLLING down the North Biscay coast last week on a small boat in the sunshine, I thought about retirement. Everybody does a bit of that on holiday, either with positive or negative feelings. When you are mid-career and vigorous you look at pottering greyheads with guidebooks, and shake your head in pity. Poor old duffers, what a boring life. But when you are tired, or just tired of your job, you start to notice bright-eyed energetic oldies striding the Tuscan hills or hauling sails to the wind. You observe enviously that they look a lot fitter than you feel. Holidays are small, unrealistic doses of retirement: they focus the mind.
Aptly enough, the first British newspaper to fall under my eye after a week of such musings was The Sunday Times, with its “leak” about the Government’s thinking on the “right” to carry on working past 65. Andrew Smith, the Secretary of State for Work and Pensions, promises an announcement on retirement ages shortly, but you do not need a crystal ball to work out that it will be about getting us — sorry, “enabling” us — to stay at work for more years.
Straws in the wind all blow the same way; we are being softened up for change. An EU directive is vaguely waved. Patricia Hewitt says: “We share a common determination to end unjustified age discrimination at work” and decries “the barriers to individual choice”. Malcolm Wicks, the Pensions Minister, writes that mandatory retirement ages belong “in the dustbin of social history” and criticises the “ conservative instincts” of employers. Gordon Brown promises a small financial incentive for delaying drawing your pension.
The Government clearly hopes that all this “freedom” will keep us paying tax for longer. On one level, this makes perfect sense: we live longer than we used to and we are healthier. Also, if the normal retirement age were 70 — or indefinite — we might see less of the alarming phenomenon of “early retirement” in which healthy 55-year-olds decide to spend the last three or four decades of their time on Earth making no contribution whatsoever. Before you start on the furious letters, I admit there are good uses of such withdrawals. Some of the early- retired turn themselves into charity dynamos, saving churches and governing schools and bringing business knowledge to voluntary work. Some open village shops, start second careers or work freelance (most of the taxi drivers round here seem to be former policemen, which makes for worryingly informative journeys).
But face it: some just garden and read and make irritable “Dohhh!” noises over the headlines and generally transform themselves into grumpy old Meldrews, perpetual onlookers and disapprovers slumped in psychic deckchairs. Even if they remain benign, they are wasting hard-won wisdom. One of the most dispiriting results of John Birt’s regime at the BBC was to drive good people into early retirement, with all their depth of experience and memory. Indeed, the phenomenon is common all across the media. Every time I hear a broadcast lapse of taste, or see a howlingly ignorant reference in a newspaper, I cringe and think of the generation of journalists, now in their late fifties, who might have steered that one off the rocks if they hadn’t been redeployed in the herbaceous border.
But I digress. For all the merits of long experience, for all the apparent demographic commonsense of raising retirement ages, traps lie at our feet. Basically, when a government talks about choice and empowerment, you should always ask: “Is this saving it money?” The answer, invariably, is yes. Nothing wrong with conserving public money, of course; but you can’t have a clear debate if you disguise cheeseparing as humane progress. They are doing this for the money, no doubt of it. The reasons are plain.
All Europe faces a pensions crisis. Already only half of over-55s are in the labour force. It is at its worst in France, Germany, Spain and Italy. But even here, instead of four workers supporting each pensioner as is the case now, by 2050 we will have two. We are not saving enough, as individuals, to offset this. The Organisation for Economic Co-operation and Development’s chief economist, Jean-Philippe Cotis, recently said that compulsion is essential: private provision must rise, benefits shrink and a longer working life become the norm for both sexes. The pensions outlook is healthiest in Scandinavia, which has the most flexible policies on women’s employment.
On the face of it, the solution is obvious, and ministers will go for it. Forbid firms from compulsorily retiring 65-year-olds, offer higher state pensions to those who defer them, and see what happens. The drawback is that neither business leaders nor unions fancy this idea one bit.
Union leaders claim that a retirement age of 70 would mean that more than 20 per cent of workers — and nearly a third of men — would die before receiving their pensions (which might see fund managers and the Treasury throwing their hats up in glee, but let that pass). Certainly, where manual trades are concerned the idea of late retirement makes a cruel prospect: I do not want to live in a country where tired old men labour on, heaving sacks or dustbins or baulks of timber to keep their homes going. I do not think that arthritic women should still be scrubbing office floors at dawn as they approach their eighth decade. Those who tap all day at keyboards often forget about physically demanding jobs: but the interests of those who do them — and who are likely to have saved less money — should be paramount in any rethink of retirement.
Equally, business leaders react with dismay to the idea that a 68-year-old worker could take them to an industrial tribunal for unfair dismissal. Some near-septuagenarians remain energetic and able; many do not. They slow down. They get set in their ways. They lose interest in the company’s future. This attitude will be all the more likely if their sole reason for staying on is not dedication but a crude financial incentive. Observe also that over-65s may become shorter of breath, creakier in the knees and more prone to doctors’ appointments. Discrimination law would compel employers to accommodate these common flaws of old age. Really old workers could get expensive.
Moreover, once the older cadre reaches a critical mass it deters younger talent. If the top of your organisation is heavy with managers in their fifties who are likely to stay until 70, you’ll have trouble recruiting. If bosses lose the option of retiring people at 65 without a fight, things could get sticky; and when it comes to mid-life career changes, my hunch is that it would be even harder for today’s 50-year-olds to get new jobs than it is now.
Ideally, the pension crisis needs tackling from two directions: by encouraging private saving, and by making it possible — but not inevitable — for energetic workers to carry on, while keeping employers’ freedom of judgment. Saving should be a high priority, and isn’t: officially the State smiles on it, in reality Gordon Brown has raided pension funds and vowed to cut by two-thirds the amount individuals can save in tax-free ISAs.
As for working longer, there are ways to encourage that without forcing employers to accept a new tranche of rights for stubborn over-65s. You could use the public sector example to encourage it by cutting back on the wasteful early-retirement deals offered to civil servants and police, and replacing them with offers of flexible work between 55 and 70. Or you could take the robust “all square” option, which I am forever proposing, and simply decree that nobody over 65 (who does not draw a state pension) need pay any tax and national insurance whatsoever on incomes below £30,000. That would cut paperwork at a stroke and encourage semi- retirement and part-time work. Age and experience could do the natural thing, and move to the edges of work without leaving it.
It is not natural to work full tilt until you drop, any more than it is to stop dead when you’re still full of zip. Subtlety and gradualism should be the approach, as befits the subtle advance of old age itself. Big bossy diktats do more harm than good.
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