private additions largely unnecessary. (Hill, 2003:25). Since this
report was implemented there have been several more developments to the
area, such as the National Insurance Act (1946) of the Clement Attlee’s Labour
government, which introduced sickness benefits and retirement pensions
(amongst other features). (Blakemore, 2003:51).
Since this there was also the introduction of a state-income based pension which
changed in relation to the amount one earned.
Today, older people receive a weekly allowance from the basic state pension,
providing they have paid their national insurance throughout employment. The
state pension is now in line with prices and inflation rather than wages, this put
into practice by the Conservative government in the 90s. Because of this the
annual increase in the pension is correspondingly low to the inflation.
(Blakemore, 2003:55). Along with the state pension any other contributions to an
older persons income will come from private and voluntary aspects such as
private pensions and investments, savings, inheritance and such like. The below
tables demonstrate the average distribution of expenses in a pensioner’s
household. (BBC NEWS, 2004)
As demonstrated above, the majority of older person’s takings come from the
state pension. One of the major problems in contemporary Britain is that whilst
the pension increase is staying low, the proportion of the population over the age
of 65 is steadily rising. Today 16% of the total population is of retirement age or
over (BBC NEWS, 2004) which has the resulting factor of more money being
required to go towards funding the state pension. However, even though the
government expenditures on retirement pensions is the largest of all the
social security benefits, if this amount doesn’t increase in relation to the number
of people it must provide for, it will result in a large social crisis. (Hill, 2003:110).
Blakemore (2003:55) states that “the state requirement pension was maintained
at a value of about 20 per cent of average male earnings between 1980 and
1989, since then it has dipped to less than 16 per cent. This is a result of the
Conservative government’s decision to uprate pensions in line with prices rather
than wages.”
He also predicts that by 2010 the state pension will shrink to only 10 per cent of
average earnings, due to the low inflation and the increasing average wage.
As there is an increase in the number of people to provide pensions for (not to
forget the steady increase in women in the labour market who will also benefit
from state pensions as their male counterparts do) it is safe to assume that more
money will be required to fund this need. However, when reflecting on the above
statistics it is clear that this requirement is not being met and, if anything, will
decrease even further over time. This, subsequently, will lead to an increase in
poverty amongst older people and an increase in those choosing to carry on
some full or part—time employment into retirement.
This problem could be tackled in several ways. One of the additional factors of
this dilemma is that one must not ignore the change in attitudes of the younger
generations compared with that of older people with regards to consumption and
saving. Predominantly, the problem caused by the younger generations was that
older people were required to remove themselves from the labour market to
provide jobs for them, sometimes extending retirement to earlier years due to
unemployment. (Alcock, 2003:294) The new generation of workers is saving
too little and consume more than they earn so the chances of individuals being
able to save for their retirement income via personal means is highly unlikely.
One answer to this is to make compulsory saving schemes for every citizen,
however as shown in the below table, those who would be using this policy (the
younger age group) are those less in agreement with it. (BBC NEWS,2004)
Another option would be to raise the tax and national insurance rates. Bearing in
mind that this amount would have to rise by £57 billion a year to keep
pensioners’ living standards at current levels, it is an unrealistic method of
solving the problem due to the fact that there are not enough taxpayers of
working age to pay pensions for everyone. The only other option is to increase
the average retirement ages from 65 (for men) to 70. This comes with obvious
conflicting arguments relating to increasing inequalities and a “betrayal for lower
income groups”, as stated by Gordon Lishman, Age Concern’s director general.
(BBC NEWS, 2004).
In conclusion, it is important to highlight the gradual changes of government
policies with regards to pensions and the current growing problem of how to
support the future generations of retired older people. Due to the way that
pensions are devised, in relation to price, it is inevitable that there will be a
poverty crisis amongst older people unless the way of raising the funds is altered.
The most important issue to address and consider would be that of bringing
about a change to satisfy the vast majority and without disadvantaging any
particular group.
BIBLIOGRAPHY
Alcock, P (1997), Understanding Poverty, Second Edition, Palgrave Macmillan.
Alcock, P (2003), Social Policy in Britain, Second Edition, Palgrave Macmillan, Basingstoke.
BBC NEWS, (12/10/2004), cited on , accessed on 29/10/2004
BBC NEWS, (12/10/2004), cited on , accessed on 29/10/2004
Blakemore, K (2003), Social Policy an Introduction, Second Edition, Open University Press, Maidenhead.
Glennerster, G (2000), British Social Policy Since 1945, Second Edition, Blackwell Publishing, Cornwall.
Government Statistics (2004), cited on , accessed on 28/10/2004
Hill, M (2003), Understanding Social Policy, Seventh edition, Blackwell Publishing, Cornwall.
