We may be working harder, but we’re not all living longer

Article published: Thursday, June 23rd 2011

When Danny Alexander announced plans to link the public sector retirement age to the state pension age in order to increase it to 66, he repeated a common myth: “We are all living longer, that means more years spent in work as well as in retirement.” The same myth was used to justify Tory proposals in 2009 to increase the state pension age.

But as with many elements of the cuts and the drive towards austerity the working class and the poorest are not all in this together with the rich. It is simply misleading to say that “we are all living longer”, since poverty and the ravages of long-term unemployment and low-paid work have meant that alarming gaps have arisen in the average life expectancy in different regions.

Taken as a national average, Alexander is telling the truth – life expectancy from birth, based on 2008/09 figures, is 77.7 years for men and 81.9 years for women, and so a person retiring at 66 would still have a good run. However, closer inspection shows that this is not true for the poorest parts of the UK, in particular Manchester.

According to figures released by the Office of National Statistics earlier this month men in the city have only a 54 per cent chance of living to the age of 75, with women only having a 69 per cent chance – both being the worst in England and Wales. Neighbouring Salford is close to the bottom, with men having a 54.5 per cent chance to reach the age and women 68.4 per cent.

In Manchester this translates to a life expectancy of 73.4 for men and 78.9 for women, while in Salford it is 74.6 and 79 respectively. Manchester is consistently the worst in England and Wales. In terms of UK results, only Glasgow is worse.

This has a lot to do with poverty. Despite the “regeneration” of Manchester destitution and child poverty is still endemic, with the city the “child poverty capital of Britain”. East Dorset, a retirement hub for the affluent, is a high performer, with men expected to live to 81.3 years and women until they are 85. In Kensington and Chelsea, the best performing Local Authority in the country, women can expect to live to an amazing 87 years, with men not far behind at 83.7. Five years ago, a report found men from the most deprived areas are 2.8 times more likely to die between the ages of 15 and 64, and women 2.1 times.

This means that, in reality, Mancunians will spend more years in work but certainly not more in retirement. Instead, the move of the retirement age to 66 means that men will lose 11.8 per cent of their years of retirement, while in Kensington and Chelsea they will only lose only 5.3 per cent. Mancunian women will lose 7 per cent of their retirement, while women from Kensington and Chelsea will lose only 4.5 per cent.

Thus public sector workers and those drawing a state pension will have a year taken from them, justified by the incredibly high life expectancy of the country’s richest dragging the average up. The richest are also the least likely to require a state pension, or any of the other aspects of the welfare state currently under threat. Alexander’s statement, and similar sentiments echoed by the right-wing media, are deliberately disingenuous.

Tom Fox

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More: National, Opinion, Welfare

Comments

1. At the moment, many public sector workers retire quite early and all of them enjoy a magnificently generous pension scheme subsidised by the taxpayers of the UK, including many low paid workers.

   Why should a public sector worker enjoy more years of retirement, and on a better pension, than those of us in the private sector?

   That’s unfair and why reform is necessary. For a state to reward its own employees far better than the public they are hired to serve is a breach of trust.

   Comment by simon on June 23, 2011 at 9:54 pm

2. i work in the private sector on a low paid job. I will not be retiring early however i don’t begrudge those working in the public sector their half decent pension package.
   We need to find a way of better supporting people in their old age more generally.

   Comment by Steve on June 24, 2011 at 9:20 am

3. Steve, you are very generous. When you retire and are watching every penny and worrying about putting the heating on I’m sure it’ll be a source of comfort to you that you’ve help subsidise a much better pension for a fellow pensioner on similar wages to you who just happened to work for the local council.

   I wouldn’t mind public sector staff having a half-decent pension scheme instead of the utterly magnificent one they’ve got now. The reforms will address this.

   There’s something sinister about the state ensuring that its own employees receive better treatment than the rest of us. That road leads to a self-serving, authoritarian state, and the state is supposed to serve everyone, not itself.

   Comment by simon on June 24, 2011 at 1:10 pm

4. It would be nice Simon, just once perhaps, if you provided one shred of evidence of how “utterly magnificent” public pensions are.

   Here are some facts:

   Pensions in the civil service are far from generous and have been changed recently to a career average scheme.

   The growing gap between public and private sector pensions is the fault of private sector employers retreating from decent pensions. The real divide is between executives in the boardroom securing for themselves large pensions with low retirement ages, and their workforces suffering repeated cuts.

   It is counterproductive to degrade pensions because it will force more people into poverty and onto state benefits in their retirement – this is more costly and will have to be met by future taxpayers.

   We all help to pay for private sector pensions through the price of goods and services. And we all help to contribute to public sector pensions through taxation.
   Excluding the very highest earners, the average civil service pension is £4,200 a year.

   More than 100,000 people receive a civil service pension of £2,000 or less a year: over 40,000 receive less than £1,000, and more than 60,000 get between £1,000 and £2,000.

   Two and a half times as much public sector money is spent subsidising private sector pensions through tax relief than paying for public sector pensions – 60% of this goes to earners at the higher rate.
   The Treasury’s estimate of the cost of public sector pensions as a proportion of the UK’s national output shows a modest increase from 1.5% to 2% by 2027/28. After this, projections show a slight decline.

   Comment by Right to the City on June 24, 2011 at 3:01 pm

5. Imagine the outcry if the government opened a bank for its own employees only and guaranteed them a superb interest rate on their savings, much better than any commercial bank could afford to offer to those in the private sector. Well, that’s effectively what the government’s pension schemes now do for its employees pension savings.

   Private sector employers have indeed been ‘retreating’ from decent pension schemes over the last 20 years.

   There’s a very good reason for that – the schemes cannot promise what they cannot deliver as they can only pay out from the return on investment from what they take in.

   Public sector schemes currently have the luxury of promising fantastic guaranteed levels of payout.The reason for that is because the government can always use tax cash from everyone to make up any shortfall between the amount the scheme has promised to pay out and the returns from investing the contributions made by public employees. It’s not because public sector pension schemes are well run by clever people who wisely invest the contributions.

   It’s a smple fact that for equal wage levels, equal contribution percentages from those wages and equal lengths of service a public sector pensioner will receive lots more cash each week from his pension scheme than a pensioner from the private sector.

   Comment by simon on June 24, 2011 at 4:34 pm

6. […] in Manchester grow up in severe poverty – the highest level in the country. It also has the lowest life expectancy in England, and has had an unemployment level among 16 to 24 year olds of around 30 per […]

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7. […] is nestled among inner city estates with the highest rate of severe child poverty in Britain, the lowest life expectancy in England and a youth unemployment rate that has consistently languished at 30 per cent for the […]

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