CAN UK SOECIETY BENEFIT FROM RAISING THE AGE OF RETIREMENT?

Can UK society benefit from raising the age of retirement?

Can UK society benefit from raising the age of retirement?

Introduction

Britain has an ageing population due to the combination of a decline in birth rates and an increase in life expectancy. This situation will become more marked during the first three decades of this century when the post-Second World War baby boom generation will be retiring. (Friedberg, 2000, 16)

UK society benefits from the age of retirement

The strongest force in this change is falling fertility rates. In the succeeding 'baby bust' generation of the 1970s and 1980s, birth rates fell below replacement levels in most advanced countries. The current birth rate in Britain is about 1.7 per woman but needs to be 2.1 to replace the existing population. It is widely assumed that these facts and figures imply enormous future social problems -- that there will be a 'demographic time bomb' as a consequence of which society will be faced with a chronic labour shortage and productivity deficit. Yet I believe this to be a myth, based on flawed assumptions. (Friedberg, 2000, 16)

In the myth, it is assumed that present trends will continue, thus the responsibility of providing for the larger numbers of elderly people will fall on a relatively diminishing working population for whom it will be a burden, and it is assumed that the solution is immigration. Phil Mullan's book The Imaginary Time Bomb: Why an Ageing Population is not a Social Problem provides a good argument as to why immigration is not necessary to solve this non-existent problem. This needs to be more widely accepted, particularly in the political establishment. In this article I have included the points he raised. (Friedberg, 2000, 16)

The pessimists use an arbitrary retirement age. British society has tended to accept the government's pension age or retirement age as the dividing line between active adulthood and old age, but when pensions were first introduced in Britain the retirement age was 70. The compression of work into fewer years of longer hours does not fit well with increasing longevity, and there have been a number of authoritative calls from parliament and the actuarial profession against early retirement.

They assume that the present retirement age equates to the age at which elderly people become a burden. Commentators have taken the ratio of over 64-year olds to the population of working age (usually taken as the 16 to 64 age range) as the key trend in the rise in the elderly 'dependency' ratio. But continued improvements in living conditions make contemporary and future generations of the elderly fitter and healthier. And as across Europe and America healthcare costs are concentrated in the last six months of life, projections should be built up by counting back from the forecast date of death rather than from the date of birth. (Liebman, 2008, 45)

They ignore economic growth. It is assumed that an ageing population will bankrupt the state pension ...