Britain faces destitution because it refuses to admit the state pension is unaffordable
The current plans to raise the pension age are too timid. If we had stuck with Lloyd George’s approach, it would be approaching 100
Quite so M’Lord Hannan
The original age of the OAPension was set at when the rational person would have run out of their savings.
When Lloyd George introduced his budget, life expectancy was 49 for men and 53 for women. Now, those numbers are 79 and 83 respectively,
Those L-G ages are expectancy at birth, not the correct measure. We want expectancy at age 15 to 20. Once you’ve survived the childhood diseases which took half the young population. And that was about 70. So, therefore, the rational person would, over a working life, create savings which would carry them through to age 70.
The aim of the OAP was to compensate – deal with – that unfortunate occurrence of outliving your rational savings.
That would make today’s pension age about 80. Which is, therefore, about where it should be.
This will cause screaming that lots of people won’t live to gain their pension. Yes, that’s the point. Because that state pension is not, in fact, a savings scheme. Not in law it ain’t – it’s a benefit. Just like unemployment etc. A piece of social insurance. So, what is the insurance against? Living long enough to outlast your rational savings. So, it should be paid from the age where you should rationally save to.
BTW, this is the analysis of one Brad DeLong, economics professor at that notably right wing establishment, Berkeley.