Former Prime Minister David Lloyd George, who led the war-time coalition Government during the First World War, is reputed to have said “This war, like the next war, is the war to end war”. This came to mind a couple of weeks ago when the State Pension reforms were revealed, and hailed as a watershed moment by politicians, signalling an end to decades of tinkering with State pension provision – much the same as had been done in previous watershed moments in 1998, 2002, and 2006. So, enjoy the new “simplicity” while you can.
At first glance, we could be forgiven for thinking that the announced intention to provide everyone with a flat-rate pension of £144 a week (in today’s terms) from 2017 is a “good deal”. Inevitably, as reality gradually dawns, we remember that our country has a national debt of, depending on the measure you use, something in the region of £17bn, and we wonder if our country can really afford to give us a “good deal”.
The bad news is that “good deals” are not really on the agenda. Most people will, in the long run, be worse off as a result of these changes … eventually. The Government’s intention is to link the state pension age with life expectancy. Analysts expect that a rise to age 68 may need to be brought forward to around 2035 to keep pace with life expectancy projections, and that it could easily be age 70 by 2050.
Younger people will again, mostly, be worse off. The UK has a declining tax base. However, few people, especially the over-50s, want their living standards to be diminished, even if it means that things are fairer for others. The concerns of this “baby boomer” generation have become increasingly important to governments. The “baby boomers” appear more than content to allow someone else to pay for their relatively comfortable lifestyle and future care. This group wants hard and difficult political and economic decisions delayed as long as possible; they want the can kicked down the road. The more delay the better; and the longer governments will stick to old, unaffordable promises. Maybe they’re taking their lead from another war-time leader, Winston Churchill, who said: “Although prepared for martyrdom, I prefer that it be postponed”.
THIS ARTICLE WAS WRITTEN BY A FORMER MEMBER OF OUR TEAM.