On Wednesday mornings between 10 and 11 o’clock, the glossy chrome, white and red McDonald’s hamburger chain has a slightly different clientele. Along with teenagers in tight jeans and kids tugging at their mothers’ coat sleeves, the formica tables and white-capped waitresses welcome the local pensioners. There’s a free cup of coffee during pensioner’s hour for anyone who can produce their pension book. Pensioners just don’t know when they’re well off!
It is, of course, only the poor who have to accept charity. And pensioners are poor – and powerless too. They have nothing to bargain with. They can’t strike – they have no jobs. They can’t act as a strong consumer lobby – they can’t afford to consume very much. And although not lumped in with the unemployed and work-shy, they are regarded as burdens on society.
Pensioners are continually being reminded of how much they cost. In Britain they take up to 40 per cent of health and other social services. They occupy at least half of National Health Service beds. And it costs seven times as much to treat a person aged over 75 as it does to treat someone of working age.
In 1982, expenditure on retirement pensions and other benefits in Britain will total nearly $30 billion. That’s nearly half of all social security benefits or one seventh of all government expenditure. And the numbers of pensioners are growing – not simply because more people are reaching retirement age, but because those who have retired are living longer.
The rise in the numbers of pensioners to nine and a half million in the UK is causing alarm. Pensioners are seen as competing for a scarce resource: money. And they’re competing with an increasing number of disadvantaged people: the unemployed, single-parent families, the disabled – all of whom have in turn become a ‘priority’ as their numbers have grown and they have been ‘discovered’ to be in need.
Still, nine and a half million pensioners is nine and a half million pensioners, whichever way you look at it. And to improve the lot of that number of people is going to be expensive. The government declares that it can’t afford even to increase the $60 death grant that it pays to help spouses with the cost of burying or cremating their dead partners. With the cost of just a modest funeral estimated to be about $800, much of the energy of pensioners’ organisations in Britain has been dissipated simply fighting for people to be allowed to go to their graves without bankrupting their surviving relatives. And if the cost of dying is high, the cost of living is higher still.
People are growing old faster than children are being born to support them in their old age. In 1931, for every British person aged over 75 there were 13 people aged between 45 and 64. In 1991 there will be less than four. The base of what is often seen as a pyramid of support is shrinking. Will there come a point when it becomes too top-heavy and topples over completely?
This is what successive governments would have us believe. As long ago as 1891 any expenditure on old people has been opposed on the grounds that the burden it would put on the rest of the community would be insupportable. When a British pension – of five shillings a week to the three per cent of the population aged over 70 – was proposed it was dismissed as being ‘so Utopian that it does not provide food for serious discussion’. Since then there have been regular ‘pension crises’ each time another hundred thousand people go to retirement. And every time, increases in pensions have been opposed on the same grounds: that living standards of the rest of the community would have to drop unacceptably in order to finance a more generous slice for the elderly.
Well, since the idea of a pension was first posited nearly a century ago no such disaster has occurred. Though the numbers of elderly people have increased fivefold and the state pension paid to those people has also increased fivefold in real terms – the real income of the average working person has managed to increase a great deal more. So clearly it has been possible to increase pensions without dragging everyone else’s income down into the dust.
Old people are looked upon as a burden because what they consume (which is undeniably small) is larger than what they contribute to society. But they consume more than they produce largely because, having reached an arbitrary retirement age, the are no longer permitted to contribute to the economy. More than this, they are even discouraged from productive employment (if they are lucky enough to find it) by the so-called ‘earnings rule’ in Britain — whereby a person’s pension is actually reduced if they earn ‘too much’.
It’s a schizophrenic system. Retired people are caught either way: a fair pension, they are told, would cripple a sinking economy. But when they attempt to work in the economy — and pay taxes to help finance other peoples’ pensions — they are discouraged by the earnings rule.
Similarly, while governments tear their hair over the numbers of pensioners, they are simultaneously considering lowering the age of retirement to ease unemployment by increasing the number of pensioners. But the proposal would only replace young unemployed by old unemployed. Perhaps pensioners are cheaper than unemployed schoolleavers. They are certainly quieter.
But, though it may be schizophrenic and contradictory, the result is the same — poverty for pensioners.
But there are alternatives. In France occupational pensions cushion the majority of retired workers in relative comfort. The French system differs from that in other Western countries by being less fragmented. One recent estimate put the number of pension funds in the UK at 60,000! Having so many independent non-government schemes is both inflexible and expensive with high administrative costs but low benefits for the individual worker.
By contrast, the system in France operates with a few large pension funds with simple transfer agreements between them. A person’s finance accumulates steadily and the contributor benefits effortlessly.
While occupational pension schemes fail to benefit the manual labourer or the housewife who has never worked, Michael Fogarty of the UK’s Policy Studies Institute argues that such schemes would make it possible for the government to increase pensions for those not covered by occupational schemes.
Combined with voluntary, flexible retirement — allowing those who enjoy their work to continue doing it while giving those who are worn down by their jobs a chance of a well-earned rest — such schemes might make a great deal of difference to a pensioner’s standard of living.
Provisions such as these are on the statute book in the UK. The 1975 Social Security Pension Act, which becomes fully operational in 1998, will set in motion the wheels of a new pension machine for today’s workers.
But its effects will be delayed. It will take another 60 years before the full benefits are felt by retired people. While that means the future looks more secure for me, it means that there is much for today’s pension activist to do for today’s pensioners.
The British Pensioner and Trade Union Action Committee (BPTUAC) has found a champion in Jack Jones, the retired General Secretary of the Transport and General Workers’ Union. Although not supporting flexible retirement, he believes that retirement age will only be determined fairly when the choice is between a fair wage and a fair pension. ‘Pensioners united will win justice’ is BPTUAC’s slogan. And the justice they claim is some reward for what Jack Jones calls ‘the massive contribution we made to the progress of this country’.
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