THE BLOG
11/12/2013 08:03 GMT | Updated 09/02/2014 05:59 GMT

Opposing Pension Raises Is Political Noise

George Osborne's announcement in the Autumn statement that the pension age will rise to 70 has prompted predictable populist opposition, which has been highlighted by the General Secretary of the Trade Union Congress, Frances O'Grady, absurdly claiming that "today's young workers are being told they must work until they drop." Considering that for the next generation of pension takers, the age is already 68, it's hardly a dramatic rise.

There is also more nuanced opposition based upon regional inequalities in the UK, which mean people in some areas will get more years of pension coverage than others, in return for the same amount of work. Neither of these are particularly compelling arguments against a pension rate raise, which - whilst not desirable - is necessary in order to maintain ratios of dependents to contributors in the overlapping generations pensions model.

There is very real, and very obvious data suggesting that the UK population is aging rapidly, and living much longer. The latest conservative projections by the Office of National Statistics suggest that just under a third of children born in the UK in 2012 will live until their 100th birthday - an occasion for which it is presently considered exceptional enough to merit a congratulatory telegram from the reigning monarch.

This data below on the UK's changing demography shows how much the age structure of Britain has changed in a century. Although the 'baby boom' of the immediate post-war era is often blamed, there are more structural forces at work. Developments in medical technology and better nutrition are constantly improving living standards and life expectancy. This is obviously good, but it also means that as long we operate an overlapping generations pension model, where one generation pays for its predecessor's whilst it works, there must be shifts in the pension age in order to reflect biological realities.

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There are, of course, a number of generational wealth and income issues aside from pensions. Intergenerational wealth issues must not be conflated with the operation of the pension system, lest debates become unfocused. Property bubbles, the differences in work-life experience between the present and previous generations and the political power of older voters are all issues that need to be confronted, but have very little to do with the nuances of the pension age.

Neither do particularly deprived areas throughout the United Kingdom provide a convincing argument against raising the pension age. This graphic is being distributed by one campaign opposing the rise.

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It of course fails to omit that this average age is also dramatically below the current pension age as well. Calton in Glasgow - a relatively small area, but one that is important for highlighting some of the worst problems facing the UK today - is often wheeled out as a statistical anomaly in a way that does it great disservice. I hope no one is seriously suggesting that an area with such a tragically low life expectancy rate, and such a high unemployment rate, would be helped by a pension rate at any suitable level. The far-reaching social problems facing areas such as Calton require much more complex and sophisticated instruments in order to solve them.

It is on these social problems that campaigning should focus. Pension age rises are not an inequality issue, they're an administrative issue. This is not a dramatic change in government policy; pensions have always been issued at a similar relative age level. Unless someone is going to start a campaign to give out pensions at 50, or younger, this is just political noise and will not achieve a change in policy, or score any political points for anyone.