Lie back and think of England

You might be aware that people these days are, on average, living longer than they used to. I guess most people would think this is a very good thing, but it also brings problems; pensions are being paid out for longer and also the cost of old-age healthcare is increasing. It's been referred to as a 'pensions time-bomb' – we're not saving enough for our retirement. How to defuse this time-bomb then...?

One solution is, of course, to retire later. And we're seeing this; older people are taking part-time jobs after they've retired from their main career and also the age at which you can start claiming the state pension is rising. To be honest, the retirement age should have gone up to something like 75 decades ago, shouldn't it? I couldn't find the exact figures, but when the retirement age was first set at 60 for women and 65 for men, the average expectation was for just a few years of retirement. Now, you can reasonably expect around 20 years (figures at the end of this post) but the statutory retirement age hasn't gone up with the greater life expectancy.

Polly Toynbee in today's Guardian has a novel solution. Not for her, steady rises to the age at which we can start claiming the state pension. Her idea is to get the birth rate up, so that the economy will get a nice boost once these babies grow up and start working. The increase in tax take will then help us meet the pension liabilities and healthcare costs of those who will be pensioners in twenty years' time or so. Here's an excerpt from the Guardian article:

For decades European families have shrunk, though they were slightly increasing in size before the crash. Alarmed governments face more older people but smaller working populations to sustain them. The Organisation for Economic Co-operation and Development average total fertility rate is 1.6 births per woman, when 2.1 is needed to stay stable. Immigration helps, but countries resist large rises. Governments start with the obvious – making older people work longer, retirement age rising with longevity. But what about the birth rate?

I hope you've spotted the slight flaw in Toynbee's plan. I wonder how she proposes to meet the costs when all these new babies are older in years and costing the state rather than contributing to the national coffers. You remember Bernie Madoff and Farepak? Well, Toynbee wants us to implement this marvellous model on a national scale; where the only way of meeting our current liabilities is to get ever more people paying in until... the instigators get thrown in prison, perhaps. It's called a Ponzi Scheme, named after an American fellow called Charles Ponzi who ran a rather impressive (for a time) fraud based on international postage coupons. So it's a well-known way of making money by criminal means but I didn't expect to see it promoted in a national newspaper as a viable way of getting the nation's finances back on track.


Life expectancy statistics

According to the Office for National Statistics at age 65 the average life expectancy is another 18 years for men (i.e. to age 83) and another 20 years for women (to age 85). Back in the early 80s it was 12 years for women and just 6 years for men. I can't find figures further back than this but I expect they used to be even lower earlier in the 20th century.