Male life expectancy at birth in UK cities ranges from 70.8 years in Glasgow City to 83.7 years in Kensington and Chelsea. The results show that Conservative plans to raise the pensionable age to 66 from 2016 will have a different impact on retirement plans in different parts of the country.
The table below taken from the Office for National Statistics shows life expectancy at birth for seven local authorities (the highest, lowest, and five in between). Left Foot Forward has calculated the percentage of projected retirement that will be lost by raising the retirement age from 65 to 66.
In the London borough of Kensington and Chelsea, the average worker will lose 5.3 per cent of their retired life. This compares to 17.4 per cent in Glasgow City. In David Cameron’s constituency of Witney, in West Oxfordshire, people will lose 6.8 per cent of their retired life.
It should be noted that the figures are indicative. Those aged 65 are likely to live beyond their life expectancy at birth.
The Government originally planned to raise the retirement age in 2026. The Conservative plans are reported to save £13 billion per year but no savings will be realised in this parliament or the next. Speaking on BBC News this morning, Kevin Maguire of the Mirror described the move as “macho politics.”
UPDATE 12.19
The basic state pension is £95.25 for an individual. This means that the average male will lose £4,953 from raising the retirement age by one year to 66.
For those already aged 65 the spread of retirement lost is smaller. Using ONS figures, life expectancy at 65 in Glasgow is 78.8 and in Kensington & Chelsea is 87.7 (a spread of 8.9 years compared to 12.9 years at birth). Raising the age to 66 therefore means that someone who is 65 today will lose 7.2% of their retirement in Glasgow City but just 4.4% in Kensington & Chelsea.
UPDATE 16.30 (Oct 7th)
DWP are reporting that “Initial estimates suggest that raising the State Pension Age only for men to 66 in 2016 would only save £1.8bn in pension payments and £0.7bn in taxes and NICs, i.e. a total saving of approximately £2.5bn. (This doesn’t take account of Pension Credit which would reduce the savings further).”
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34 Responses to “Cameron’s plans cut retirement by 17% in Glasgow”
Frank Camaratta
Cameron’s plans cut retirement by 17% in Glasgow | Left Foot Forward http://short.to/ssx2
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Roger
As Steve Webb’s blog and comments there point out the real Achilles Hell of this proposal is the figure of £13bn that it is supposed to save.
From Cameron’s rather garbled attempt at clarifying the proposals this morning the £13bn seems to be based on a piece of theoretical work by NIESR published in July http://www.niesr.ac.uk/pdf/EWLfin.pdf.
While this does make a fairly compelling macro-economic case for extending working lives it does not say anything as silly as that £13bn can be ‘saved’ through a one year increase in UK state retirement ages.
In fact it goes to some trouble to discount any such notion pointing out that such a change will only have a marginal effect in macro-economic terms due to it impacting on only the very poorest section of workers nearing retirement age.
Rather they are describing the overall economic effect of a much more radical change in culture to extend the working lives of the whole workforce – bankers as well as binmen – and calculating the increase in GDP that would theoretically result from an increase in labour force supply:
‘A coordinated increase in working lives of one effective year (18 months on the age of retirement) could increase tax revenues and reduce retirement spending by enough to reduce the government deficit by 1 per cent of GDP permanently’.
The £13bn bandied about by the Tories appears to have been back-calculated from total UK GDP (money GDP for 2008/9 was £1,435bn so 1% of this would be £14bn) rather than from any detailed calculation of pensions paid or revenues raised.
However the Tories appear to have no proposals for ‘a coordinated increase in working lives’ other than changing the state pension age – a measure which NIESR explicitly state would not produce anything like the full effects predicted in their model.
Yancey Thomas
Cameron’s plans cut retirement by 17% in Glasgow | Left Foot Forward http://bit.ly/EfxwC