Managing my money
Managing my money

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Managing my money

7.3.1 Pensions and retirement – a social revolution

This video shows a piece of recent history – how a debate from the mid-2000s has evolved into recent government announcements about the raising of the state pension age and the end, for most employees, of a compulsory retirement age.

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VOICEOVER:
Our great hope is that economic growth will be the saviour of living standards, as the productivity of those still in work increases to pay for our pensioners. But as the ratio of the working to non-working population continues to fall, what happens if productivity can't fulfil this role?
DAVID BLAKE:
It's very unlikely that at least in the short term we're going to get the kind of historical growth rate trends in terms of productivity. If companies are taking their profits and using them to make good pension deficits, that money is not available for investment programmes. Therefore, the capital per worker won't be there and that means you won't be getting the productivity growth improvements.
VOICEOVER:
One way to potentially increase productivity and cut the cost of pensions is to let people work for longer. An appealing option for many pensioners not yet ready to give up their working lives.
MORRIS SPENCER
You've got the Thames snaking around there. This...
VOICEOVER:
But at 71 Morris Spencer is still working here as an attendant. The museum has abolished its retirement age.
MORRIS SPENCER:
When I was made redundant off my other firm, being the age I was people just didn't want to know you. Right? Luckily enough I got an interview with this place and I've loved it ever since.
VOICEOVER:
At the museum, they believe its attitude not age, which matters at work.
GEORGE LEESON:
The research that we're doing at Oxford would indicate that people expect to actually continue to 1make a contribution in the workplace - they're not being allowed to for various reasons. Among others the rigidity for that structure in the workplace and in society, which says once you're out you're out and it's very difficult to get back in again.
CARER #1:
Most people can't get jobs once they get older. It is hard. You can go and work in B&Q for example, or you can come and work in places like this as a carer. But if you want to get any higher position I don't think you can get. There is still this bias towards age. For the next few years I can't see me retiring because I've got a house which I'm still paying mortgage for next four, five years. So really I need to work.
VOICEOVER:
Others have been thrust back into the work place by circumstances beyond their control.
CARER #2:
I was working for Orange Telecommunications and I thought that they'd carry me out of there in a box. I didn't really want to leave so I was made redundant. It's only three years ago, I was 57 and I thought ooo, you know, what the hell am I going to do now? So my husband had had a stroke, well I expected him to carry on working, me to semi retire, instead of being thrusted at the deep end to actually be the breadwinner. I couldn't see a light at the end of the tunnel. It was very, very scary, mainly because my husband really, not being able to earn money. And then I saw an advert for this so I think they're gonna carry me out in a box now or put me in a bed.
VOICEOVER:
Whether you wish to continue working later or not, the Turner report recommended that the retirement age move to 68 by 2050.
ADAIR TURNER:
What will happen is that people will get to what they thought was going to be retirement age, they'll get to their early or mid 60s, they will find that they have insufficient money in their pension plans and they will then feel the need to retire later.
DAVID BLAKE:
Adair Turner came up with four very stark choices. Either you work longer before you retired, or you paid more taxes to increase the state pension, or you put more into a private sector pension. The only other alternative is you accept living in poverty in old age. Now the problem that we face is that individually and collectively we don't pay more taxes, we don't put more money into a private sector pension plan, we refuse to work longer and then we are not willing to accept poverty in old age, and we demand that the next generation of tax payers bails us out.
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If you don’t want to work well into your 60s you need to act on and regularly review your pension plan to see if you can afford to retire before the state pension kicks in.

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