Analysis: The retirement age false choice

Scrapping the default retirement age is being sold as a ‘good thing’. Don’t be fooled. The government is taking this step not because it wants to – but because it needs to.

By Alex Stevenson

There are, of course, huge benefits to making it easier to keep on working. Not being forced to retire on your 65th birthday means many older people have the option to continue slaving away, if they so wish. Paperwork will be cut: there will now no longer be the need for employees to keep ‘right to request’ working beyond retirement forms, or for employers to give a minimum six months’ notice of retirement. And then there’s the economy, which will be boosted by the sudden extra injection into the workforce. Britain’s annual GDP could be increased by an extra £13 billion.

“We want to give individuals greater choice and are moving swiftly to end discrimination of this kind,” employment relations minister Ed Davey has said enthusiastically. This all sounds marvellous. It plays up our freedom, giving us the option: ‘why not carry on working?’

Once we broaden the perspective, however, the reality is very different.

Sweeping demographic shifts are changing the face of British society. They’re virtually unstoppable, at least in the short-term. And they’re bad news for those of us who would rather have a lengthy retirement. We’re going to have to work harder than our predecessors, whether we like it or not.

Last month the Office for National Statistics released figures showing the rapidity with which the shape of the population is changing. Over the last 25 years, the percentage of the population aged 65 and over increased by over 1.7 million people. The next 25 years is likely to see an acceleration of the trend. The ‘oldest old’, those aged over 85, numbered 1.4 million in 2009. By 2034 they will hit 3.5 million, making up five per cent of the entire population.

This comes as no surprise to those in government, at least some of whom have spent their long years in opposition engaging in ‘big thinking’ ranging far beyond the limited horizons of the five-year electoral cycle. Earlier this year higher education minister David ‘Two Brains’ Willetts published The Pinch, his assessment of inter-generational obligations. He argued the large size of the babyboomers generation had proved a blessing for them – and a curse for those following them.

He predicted the pinch will come in 2030, when population shifts combine with other factors to create a perfect storm.

“Demographic pressures, climate change, energy security, pressures on water and food supplies: all this adds up to a time of peril for humanity,” he wrote.

All of a sudden the abolition of the default retirement age doesn’t seem like such a big deal, does it?

Yet it is, nevertheless, necessary. With the median age projected to rise from 35 years in 1984 to 42 in 2034, the government is set to implement a number of measures designed to force us to work for longer. Uppermost among them is an increase in the state pension age, currently under review, which could be reset at 66.

Yes, the abolition of the default retirement age does provide more choice for individuals who feel energetic enough to keep going at 65. When it comes to the bigger picture, though, don’t be fooled by an illusion of choice.