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UK pensions and Waspi campaign: Why state pension age is going up and what we need to do to bring it down, be it a more productive workforce, immigration, building more houses or having more children

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The current Waspi campaign by women affected by changes to state pension age has brought the issue back into focus again. And it will really ignite in 2018 when male state pension age starts to increase above its current level of 65.

It’s a common misconception that the national insurance we and our employers pay while in work is some sort of payment into a fund to provide the state pension. But it isn’t. The Treasury use the national insurance they collect from workers this year to pay this year’s pensions to retired people.

That would be fine in a stationary population. But when you look at the UK and see that since 1974 the number of over-65s has increased by almost 4 million, that’s another 4 million elderly mouths that current workers have to feed. By 2044, the Office for National Statistics predict that one in four of the population will be over 65. In 1974, it was only one in seven.

To cope with this growth of the elderly population, who consume two-thirds of the Department for Work and Pensions’s benefits expenditure and cost the NHS twice as much as a working age person, the state pension age must rise. And it will go on rising inexorably until we come up with a better way of re-balancing the population.

Three possible solutions are:

  • Reverse the UK’s steady decline in fertility rates. We now only produce 1.8 babies per couple. First time mums are now on average over age 30, a figure driven up by the need for two wage earners to save up for so long to get a family sized house

  • Increase immigration, and while this may sound politically explosive, immigration does lower the age of the population. Looking at those coming to the UK, 80 per cent of immigrants arrive before their 30th birthday. And the majority of them leave again before state pension age

  • Increase productivity. We need a culture of embracing change, utilising technology so we all work smarter, squeezing every last bit out of our labours.

Housing, specifically building the right homes in the right places for the right people, is a key issue which must be addressed if these three solutions are to be achieved and so it’s no surprise that whilst the people are complaining on state pension age, the candidates for Mayor of London are focussing on housing.