Like most organizations that commit themselves to a ‘fairer’ society, the UK’s equality watchdog – The Equality and Human Rights Commission – rarely comes up with socially or economically sensible ideas. Its new set of proposals focuses on over 50s in the workforce, and caries the usual suggestions for ‘anti-discriminatory’ government initiatives and legislation that would bog down the labour market and do more harm than good. However, they also suggest one very good idea: namely scrapping the default retirement age.
The state pension age reflects an era where many workers only lived a few years past the retirement age. Nowadays however, 64% of women and 24% of men wish to work beyond this, and provided they are still adding value to their workplace, they should be free to do so. Out-of-date legislation shouldn’t be used to push the workforce onto state dependency.
Once out of work, people must rely on their lifetime savings and any available pension to get by. And as people are living longer, their own saving must stretch further, while pension schemes become increasingly strained and unsustainable. When people retire at 65, they take with them valuable skills and knowledge that could still contribute to the economy and provide them with personal financial and personal gain. Abolishing the default retirement age makes individuals better off & the public purse a little less pushed: Research from the National Institute of Economic and Social Research suggests that extending the average Briton’s working life by 18months would net Britain an extra £15bn.
The Department of Work and Pensions has signalled that it is taking this suggestion seriously, which can only be a good thing. Now, onto reforming the giant Ponzi scheme of a state pension...