4.3 Reconstituting older people's personal lives in uncertain times
The multiplicity of different ‘work-endings’ at the close of the twentieth century, combined with the increasing mobilisation of older people through pensioner and ‘third age’ movements, effectively destabilised the institution of retirement and the associated orthodoxy that older age began at the age of 60 or 65 years.
However, voices from within the pensioner movement were marginalised in the process of reconstitution that ensued. A neo-liberal redrawing of the boundaries between paid work and welfare resulted in welfare becoming increasingly contingent on paid work, with the role of the private sector being privileged over the state in the pensions arena. Further, while the Conservative administrations of the 1980s and early 1990s set the parameters of this redrafting, subsequent Labour administrations (while tinkering at the edges) have continued to work broadly within neo-liberal parameters initially set by the Thatcher administration.
Index-linking of the BSP to earning was one of the first things sacrificed in the Conservative Government's mission to rein in social security costs in the 1980s. By breaking the link to earnings, and pegging increases in the BSP to prices alone, the Thatcher administration provided the basis on which the real value of the pension would fall sharply in the medium and long term. Equivalent to just over 20 per cent of average male earnings in the early 1980s, its value in the late 1990s had reduced to just 14 per cent. These and other pensions reforms are estimated to reduce public spending by £12 billion over the next 50 years (Ginn et al., 2001, p. 49). The costs of this, measured in terms of the way older working-class people experience their personal lives, are profound. Further, New Labour shows no sign of reversing this policy.
Reneging on promises to reinstate the earnings related link to the BSP during its first term of office, this amounts to a covert phasing out of the BSP; the value of which is scheduled to fall to only 10 per cent of average earnings by 2030 (Blackburn, 2002, p. 286). This feature is likely to increase pensioners' reliance on mean-tested benefits and the deterrent effect associated with such benefits because of their nineteenth-century Poor Law associations. For example, around 2 million older people eligible to claim means-tested income supplements did not do so in 2000, and government estimates suggest this trend is likely to continue. This means that a large section of the UK's older, working-class population – and particularly older working-class women who tend to have least access to other sources of income – will continue to inhabit personal lives lived in or on the margins of poverty (Ginn et al., 2001).
Partly prompted by the low level of pension provision furnished by the welfare state, around 50 per cent of workers in the UK are members of occupational pensions. Although traditionally promising a relatively affluent retirement future for their members, the security once offered by occupational pension schemes has recently become subject to increasing risk and uncertainty. For instance, large, high profile companies like ICI, Sainsbury and BT closed or changed the terms of their occupational pension schemes from the late 1990s, to their workers' disadvantage.
Jeopardising the secure retirement incomes of the traditionally privileged middle classes and skilled sections of the working classes, such moves on the part of employers triggered significant levels of political and industrial protest, as both young and older workers mobilised to safeguard their pension rights (Blackburn, 2002).
The increasing uncertainty and risk around occupational pensions is likely to compound the inequalities traditionally informing this form of private pension provision; inequalities which, as we see below, are clearly organised around intersecting differences of class, ethnicity, gender and (dis)ability.
Occupational pension schemes are predicated on full-time employment over a complete working life. Feminist analyses emphasise how this is most consistent with traditional male working patterns, as women's experiences of paid work are more likely to involve periods of part-time employment, and time taken out of the labour market in order to meet unpaid care responsibilities. Occupational pension provision, therefore, closely reflects labour market divisions (Ginn et al., 2001), the constitution of which reflects and reproduces ingrained patterns of inequality of not only gender but also class, (dis)ability and ethnicity. Women are disproportionately concentrated in low-paid work that is defined as unskilled or semi-skilled. Likewise, racialised minority groups and people defined as having mental and physical disabilities continue to be excluded from, or marginalised within, the labour market. Having significant implications for income levels generated during their working lives, this pattern of inequality is mirrored in the retirement incomes of older people (Bardasi and Jenkins, 2002).
Further, the growth of ‘non-standard forms of employment’, like part-time working, promises to exacerbate the situation. For example, a total of 223 people responded to a questionnaire survey on ‘Women and Pensions’ conducted by the Pre-Retirement Association and Help the Aged in 1995 (Peggs and Davies, 2001, pp. 92–3). Indicating that all respondents in full-time employment had been offered an occupational scheme, it revealed that employers had not offered part-time workers such a pension scheme. For example, one part-time employee indicated: ‘Even if I wanted one [a pension], which I do, I haven't got one – I've got no choice’ (Peggs and Davies, 2001, p. 92)
Moreover, while employers are now legally required to treat full-time and part-time workers equally in this respect, the insecure nature of some types of part-time work makes it difficult for part-timers to plan for the longer term. This feature means they often have little or no real personal choice in securing an income for their older age – as a second survey respondent indicated:
I would [join] now … if I had a full-time job … But I think because I regard this job as temporary … [and] employment has always been conditional … it's always been very difficult to plan for the future.
(Peggs and Davies, 2001, p. 93)
Like the Conservative administrations preceding it, New Labour's downgrading of the state's role as a pension provider has gone hand-in-hand with moves to privilege the role of the private sector. In the case of the Conservatives, this involved offering workers financial incentives to take out personal private pensions. This policy culminated in the widely reported pension mis-selling scandal of the mid 1990s, as it became clear over 20 per cent of the 7 million employees who subscribed to such private pensions had succumbed to high pressure sales tactics and had purchased expensive and inappropriate schemes (Phillipson, 1998). In the case of New Labour, this privileging of the private sector, and the implication that pension provision represented an individual responsibility, involved the launch of Stakeholder Pensions (SHP) in 2001.
While introducing reforms aimed at avoiding a repeat of the mis-selling scandal that plagued the Conservative government's private pension policy, New Labour's SHP policy, and the assumptions on which it is based, nonetheless raises a number of important questions – as we see below.
Read through the following quotation, taken from government publicity material, aimed at promoting take-up of SHP. As you do so, think about the kind of personal life it constructs and assumes.
Parveen is a self-employed fitness trainer in her late twenties, earning around £14,000 a year. She has recently bought a flat with a friend, and now that the initial expenses are out of the way she thinks she can afford to start a pension. She has considered the information on stakeholder pensions, including the ‘decisions trees’ and this helped her to decide that a stakeholder pension would be suitable for her.
(quoted in Blackburn, 2002, p. 314)
Now read Extract 7 by Polly Toynbee, which offers a commentary on the quotation above, and see how your responses compare.
Extract 7 ‘Prudent Parveen is the chancellor's fictitious saver’
Parveen is the star of the government's guide to stakeholder pensions. … So who is this model citizen …?… She seems surprisingly certain about her future life …. [S]he is quite sure she will not have children and will not need rainy-day money, her savings untouched until she is 65. Parveen is a paragon of prudence. With a mortgage on £14,000 pay (she plainly lives far from the South East), ‘Guardian’ [newspaper] writers, using average mortgage figures, reckon that after tax, national insurance, council tax, mortgage and energy bills, she has about £6,480 a year or £135 a week to live on. So what made her decide that a pension was right for her? Shouldn't she have put any savings into an ISA where she could get the money back if she ever gets sick, loses her job or just needs it? Did she have a financial adviser? If so, she was mis-sold this pension. I called the Department of Social Security in whose stakeholder guide Parveen features. Would it be possible to interview her?… ‘Um, well, actually she's an example.’ Oh? ‘She's not real.’ Just as well since a real-life Parveen might be going hungry to pay for her old age. No, Parveen is just a decoy duck, displayed to entice real life Parveens. There are, the government says, five million sitting ducks at whom stakeholders are primarily targeted. They earn between £10,400 and £20,000, and currently have no pensions. However research suggests that most people on below average earnings can't afford pensions. (A third of those who take out personal pensions default within a few years, losing most of their money.)
Take up of SHP has been much lower than anticipated, with research indicating that half of the target audience have not heard of the scheme, and that two-thirds have no plans to take out a SHP. This suggests that large sections of the UK's population will continue to rely on the ever-diminishing returns of the BSP and the impoverished personal life this frequently involves.