This Paper will be looking in to income during retirement. There is a broad range of aspects that relates to income during retirement these includes issues such as gender, demographics, pensions and insurance schemes, informal care and voluntary care.
All of these areas are relevant to income during retirement but the subject would seem over determined in relation to the word limit, and for this reason the paper will focus on state and non-state pensions. Both forms of pensions will be discussed, analysed and compared in relation to each other.
Causal links between age and poverty have been found. (Alcock 1993).
“26% of pensioner couples and 35% of single pensioners in 1992-3 were defined at being at risk of poverty” Haralambos &Holborn 2000 :312
It would seem this could be a result of numerous reasons. One main influential factor would be the significant reduction of income due to limited employment prospects. This is due to a number of factors including old age being a cause of ill health, social stigma, and ageism e.g. age limit requirements on specific jobs etc GET REFERENCE. Between 1971-1994 there was a decrease in older (age 55+ workers (Walker 2001). This may be linked to loss of employment opportunities, the entitlement of benefits or the need for a break from work e.g. the luxuries of retirement.
The percentage of elderly in relation to the population is seen to be on the increase. This is perceived to be a major contemporary issue as it has the potential to cause many social and economic problems throughout the United Kingdom. Through graph analysis of the Government Actuary’s mid 1994 based principle projections it has been predicted that the percentage of people aged 0-49 will decrease between present and 2040 where as the older generations (50+) are increasing in population (Walker 2002). This is a result of people living longer and the birth rate decreasing (Mooney 2001). The increase of modern technology and the advance of health care systems, welfare policies and economics all contribute to prolonging life expectancy.
In the 19th century state pensions were obtainable, they did not exist (Alcock 1993). This may be because social policy in those days was not as financially supported, developed, researched and focused on as it is in the 21st century. People did not live as long as they do today which also influenced this, as state pensions were in less demand.
The first introduction of state pensions into society was in 1908, when the National Pension Act was formed (Walker 2002). In the post war reformation (1942), Beveridge (a civil servant of government throughout second world war) influenced through recommendations the next major change for pension provision- pensions for all. This was enforced by the labour government at the end of the war in the form of National insurance contributions. Modern day pensions are still influenced by these recommendations (Hill 2000).
The national insurance contribution system was a form of nationalization. The idea was that the employed public of Britain was paying money out of there earnings to benefit the needs of people more disadvantaged financially e.g. elderly.
As the birth rate is decreasing and people are living longer, there are going to be less workers to finance the benefits and a big increase in demand of state pensions from the elderly. There is also a increase in the chance of individuals needing pensions as peoples life expectancy is high. This in turn has stimulated long-term concern with the future provision of state pensions and the possibility of a break down in the pension scheme. It is one of the main social policy issues (Walker 2001)
Everyone of the correct retirement age (60 for women, and 65 for men) is entitled to a state pension. This ensures equality and promotes the well being of every one within this particular age group. The government through national insurance contributions of younger generations ensures that everyone legible for a pension has a regular basic income, which aims to provide basic necessities (Spicker 1995).
It has been argued that the provision of pensions is limited and although it may cover some basic amenities it is still seen as not enough. As there are still so many elderly as previously discussed that are at risk of or suffering from poverty this indicates that the pension may not be enough.
Non-state pensions are the second form of pensions that will be disscused. Non-state pensions are-
“Schemes based on some kind of membership (like professional schemes and trade union schemes)” Spicker 1995:181
Before state pensions, income in old age if the individual lived till that old was determined on occupational provision. The British civil service was the first official organisation to ensure the provision of pensions to their workers. Fixed ages of 70 for retirement were enforced. (Walker 2001)
In the 21st Century private/ non-state pensions are becoming more and more popular. Often they are used to add a supplement to state pensions, as they are not enough. Another factor that has increased the popularity of non-state pensions is the discussion of the possible problems that could occur with the state pensions in the future.
Private pensions do take off welfare provision of the state. They are also seen to “encourage self improvement and self-control over pensions (Hill 2000:134). Although this on the other hand could be argued, private pensions are perceived to promote social inequalities. People that are unable to work e.g. due to disability would be at a disadvantage as they would not be able to earn a private pension through occupational means. Savings could be made in non-occupational pension schemes although if they are already relying financially on bare minimum, saving is often an impossible task. If state pensions do collapse in future and the reliance of private pensions is not optional but vital then this has great disadvantaged impacts on certain “bloc’s” in society (Hill 2000). Private pensions conclusively distribute more money to those who are already financially well off and therefore favour rich and disadvantage poor.
Although pension provision has significantly progressed and developed since the 18th Century there is stillroom for vital improvement. With the risk of pension money running out it would there fore seem that a scheme does need to be worked out to ensure a stable pension provision for the future weather this state or non-state whilst considering the link of age and poverty. A good pension scheme would be the a good start of tackling poverty throughout the elderly. Leaving this system how it is could lead to an increase in poverty.
If pension privatisation in the future was the main source of income during retirement it would seem crucial that means tested pensions were enforced to provide to those that require extra benefits. This would insure the financially worst off had more pension and the financially well off had to provide there own. The government could also introduce for emergency non-permanent measures workers contributing to the present pensions and there own in the future.