Letter on gradual retirement
by Dr. Ros Altmann
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I would like to clarify that I am not suggesting private pensions have caused our pensions crisis. (Letters 31 March). Rather, attempts to force too much responsibility for pensions onto the private sector, cuts in state pensions, combined with outdated attitudes to age, ageing and ‘retirement’ are much more to blame.
If private pensions merely supplement earnings, rather than replacing them, they become affordable. The UK’s experiment with the ideology of privatisation and ‘funding’ has not delivered a reliable solution. The Bush administration is attempting the same deception in the US and would be well-advised to look at our experience. We spent £12bn on privatising SERPS, to save £3.5bn in future expenditure and now have to means-test over half of our pensioners to avoid poverty!
Talk, by the private pensions industry, of compulsion is not addressing reality. Compulsory pension contributions are the economic equivalent of a wage cut or a tax increase and are likely also to lower employment levels and economic activity. At least 70% of the population simply do not have the resources to save enough to provide what we currently demand of pensions.
Why should there be some ‘magic’ age after which individuals are considered no longer able to work? Gradual, flexible withdrawal from the labour force – a new phase of life after full time work, before full time non-work – is a solution that is sustainable and affordable and is much better for individuals, the economy and society as a whole. It also has the flexibility to adapt to demographic reality. The sooner we realise this, the better our futures will be.