Bill Jamieson: Too busy to believe pension pipe dream

I always thought we had a magic gene that singled us out. But to hear it from the government’s mouth is really something.

Nicola Sturgeon, the able Deputy First Minister, claimed last week that Scotland’s population is ageing more slowly than the rest of the UK. It is this belief that has spurred the SNP administration to float the notion that, in an independent Scotland, the retirement age need not go up, people would be able to retire earlier – and, of course, with more money. It has set up a special commission to examine this.

What a fantastic solution early retirement on better pensions would be for so many of us. At a stroke a huge burden of worry is lifted. I, for one, would be relieved of a dreary and until now unavoidable chore. It falls every so often to business journalists to warn of pensioner poverty, “the pensions time bomb”, the yawning gap between pension saving and the level needed to secure a comfortable retirement.

This yoke that I have borne for decades is all the heavier knowing, while it is all true and the figures get worse each year, the very word “pensions” is a turn-off. It is all too depressing. But no longer! We are not only spared ageing, but all the anxiety of pensioner poverty.

Unfortunately, not everyone agrees with Sturgeon’s longevity arithmetic. The SNP’s pensions paper failed to mention that its own agency, the National Records of Scotland, gave evidence to Holyrood’s finance committee last summer declaring the exact opposite. It made clear that the country’s population is “projected to age more rapidly compared with the UK”. The SNP also excluded its own figures, which confirm there is projected by 2035 to be a much higher ratio of pensioners to workers in Scotland, compared with the rest of the UK.

Conservative leader Ruth Davidson bravely sought to raise the point in Holyrood last week but was brushed aside by the First Minister with the insouciance we have come to love and admire.

However, I suspect that demographic change is set to be one of the major issues in the decades ahead. Last week, a House of Lords committee drew attention to ONS forecasts that the number of over-65s in the UK would grow 50 per cent by 2030, with those over 85 doubling in the same period. On the basis of these projections, it expects the ratio of over-65s to those of working age to rise from 30:100 currently to around 50:100 in 20 years.

Terrifying, isn’t it? Well, up to a point. For there is one huge demographic change under way which has the merit of providing a solution of sorts to pensioner poverty. Unfortunately for Sturgeon, it is a solution that points in exactly the opposite direction to her mooted pension age policy.

Since 2007, there is one segment of the UK labour market that has startlingly and without fail shown a rise in the numbers of those in work. It is to be found in the ONS Labour Market Statistics where employment is analysed by age group. Throughout the deep recession and prolonged stagnation there has been one column where numbers employed have continually risen, quarter on quarter, without exception for more than five years: those aged 65 and over. And the latest figures show that the number employed here has now broken through one million.

Few bothered with this column until now. But it is showing an astonishing social change and one that I believe has much further to go.

Depressing, isn’t it? Or is it? It is certainly the case that many are compelled to work beyond retirement because of pensioner poverty. Either they have failed to save enough or the performance of their pension savings failed to match the figures in those glossy sign-on brochures. The disappearance of private sector occupational pension schemes, pension fund mis-selling, two bear markets in the past 14 years, government raids on pension fund dividend income, rock bottom interest rates and inflation have all worked to undermine pension fund performance and public confidence in long-term saving. Many are obliged to work because they have no choice if they are to pay the bills and make ends meet.

But there is another side to this. Many are now reaching retirement age with both the desire and the capability to work on in a part-time or freelance capacity. They may be in business services, accountancy, the legal profession, tourism or related businesses, architecture and design, financial consultancy or IT services, where skills, knowledge and experience are of considerable value.

And work is a social activity. It defines us. It keeps us connected to the world. Many do want to carry on working, and as life expectancy extends so, too, does the ability to work for a little longer than the formal retirement age.

Helping to enable this has been the transformational impact of information technology, the internet and e-commerce. One truth that the GDP figures are failing to capture is that the economy that is emerging from this prolonged downturn is different in composition and dynamic from that which entered it.

There is an explosion in micro-business formation. And many of those starting out on their own are doing so after many years’ experience in formal employment in large companies. They are thus both able to use their skills and augment their pension income.

The government may decree any formal retirement age it wishes. The fact is that people are opting to work longer and will continue to do so in ever larger numbers – particularly when there is now talk of curbing tax relief, as Labour shadow chancellor Ed Balls suggested last week, on pension contributions for those with “high incomes”.

Keep hitting savers with rock bottom returns. Keep raiding pension schemes. Keep banging on taxes and battering away at tax relief and soon there’ll be little by way of long-term savings at all. We’ll look to the government to help us out.

Dream on. We’ll all be working long after Nicola Sturgeon and her pals have retreated to the Holyrood Dun Governin’ Retirement Home – and at an age not necessarily of their choice.

Twitter: @Bill_Jamieson