Thursday, 5 December 2013

Chancellor's Autumn Statement: Why should 65 be sacrosanct as a retirement age?

by Julie Perigo
Member of the People Matters group of the CCEG, and Chair of The Henley Partnership

The issue of retirement and pensions, which has recently surged back on to the agenda, is not just about changing government financial support structures. It needs to be about changing mindsets within organisational employers and within individuals themselves as well.

I find it quite bizarre that the age of 65 seems to have been set in stone in the public imagination, and by the media when it is a purely arbitrary number.  As I highlight in my book, “Winners in the second Half” (Wiley 2008) Bismarck introduced it as the age for the Old Age Pension in Prussia back in the 1880s , allegedly basing it on the question, “By which age are most of them dead?”.  It meant that approximately only 2% of the population were alive to take advantage of it and because, of the health conditions at the time, were generally assumed to be disabled and therefore incapable of work. Others countries took it up as a norm as they introduced State benefits.

Lifespan and health remained fairly static until after the Second World War, so there was little cause to review pensionable age. Thereafter, growing prosperity in the Western world did lead to greater longevity and better health…. But the prosperity, economic growth and higher birth which increased the amount of contributing producers meant that supporting pensions for 65+s looked sustainable although, even then, recognised as generous.

In the 21st century, however, there is no reason not to question the pensionable age. Given the immense changes in our health, longevity and even type of work we do, it should be up for grabs. And it may possibly need to change again in 20 years time.  Concurrently, we need to facilitate greater national debate on what the Pension should be and whether there are other options to incentivise personal saving to support oneself in retirement, as in other countries such as Australia and NZ.

The fact that changes to the Pension still raise such knee-jerk opposition illustrates  just  how much misunderstanding there is about later-career issues, and how much personal and organisational change still needs to take place in our society. 

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[The views and opinions expressed in this blogs by guests or members of the CCEG are those of the author, and not of the CCEG or the University of Northampton Business School]

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