Citywire for Financial Professionals
Share this page:
Stay connected:

Citywire printed articles sponsored by:

View the article online at

Why retiring at age 68 isn't too late

Public sector unions have launched a campaign against government plans to increase the state pension age to 68 but fail to take into account the burden faced by taxpayers.


by Michelle McGagh on May 08, 2012 at 13:04

Why retiring at age 68 isn't too late

The row over public sector pensions has been rumbling on for over 18 months now and thanks to strike action planned for Thursday it looks like it is set to continue.

Public sector workers are angry that they will have to work until age 68, rather than 60, and contribute more to their own pensions but receive less when they retire.

It is difficult for private sector workers who do not benefit from taxpayer-funded, gold-plated pensions to sympathise with the strikes.

However, the unions representing public sector workers are clearly trying to get the general public onside with the launch of a new campaign called ’68 is too late’.

Instead of focusing on the disruption the strikes will cause, through this campaign the unions are trying to mobilise the general public to stop the state retirement age increasing to 68, and more than likely beyond.

But before the general public gets behind this campaign, they really have to ask whether 68 is too late to retire?

If you strip the politics out of the decision to increase the state pension age and look at it objectively, it is a move that makes financial sense.

When the basic state pension was introduced in 1948 the average person lived just two years in retirement – not a huge burden on the government or taxpayers.

Now, a person aged 60 can expect to live another 20 years, which is a huge financial burden for taxpayers whichever way you look at it. Looking at the bottom line, the state cannot afford to fund decades of retirement.

Life expectancy is improving by between 1.5 years and two years every decade and it is unrealistic to think that the state pension age will remain static.

Just because we feel entitled to retire at 65 doesn’t mean we should or that we, or the state, can afford to.

The employment debate

The thrust of the unions’ argument against the pension age increase seems to be ‘it’s not fair’, but they have also said increasing the retirement age will have a negative impact on the jobs market for younger people: more old people will be in jobs that young people could have.

Sign in / register to view full article on one page

40 comments so far. Why not have your say?

Rose G

May 08, 2012 at 15:08

Load of bollocks as far as I am concerned.

How do we expect firemen, police, nurses, doctors etc to continue with their work till 68 - would you be happy to have a 68 yr old firemen to put his life at risk trying to rescue you?

We know that governments can & will do exactly as they please & it is up to all workers to stick together to defeat their rubbish policies.

Private sector workers are divided against public sector workers & this is a very fruitful way of bringing about change by dividing us - all workers should stand against governments who actually care little about workers, they are just more interested in supporting their buddies in high places, the bankers & millionaires who bank roll the political parties!

report this

mark jukes

May 08, 2012 at 15:28

Policemen put in 25 years service - mostly retiring around 48 - 50 years of age - firemen the same - both on incredible pensions and most carry on working (they must be raking it in!) - cant see that changing can you?

I would be more than happy to be seen by a doctor who has 40 odd years of experience behind him - how good would that be? and what a total waste of taxpayers money to let them retire, with all that experience, early.

As far as nurses are concerned they can carry on until a ripe old age just like the rest of us - whats the difference?

We have a mess left behind by the prime mortgage fiasco that was made a lot worse by the last government spending borrowed money on Tax credits for people who already earn enough and doctors who were paid twice as much (for what exactly?), etc.

Private sector workers have always been treated differently to public, have always had the worst deal. Private and public sector workers have always been divided because of this and now the private sector is standing back and seeing something fair happen for a change.

This isn't dividing, this is equalizing and it should have happened years ago.

report this

Keith Cobby

May 08, 2012 at 17:33

The answer to all this is to acknowledge that the final salary pension is finished and no longer affordable to any private or public sector employer.

Employees on existing final salary pensions should be able to continue under their existing terms but all new employees (including MPs) should be moved to DC pensions.

report this


May 08, 2012 at 17:58

Maybe we need to think more about second careers - just because I work in an office job doesn't mean that I can carry on doing this until 68. So what am I doing? I'm saving more so that I can downshift to a part time, less stressful job that I can continue with.

No-one has said that public sector employees have to continue working - but if they do want to retire earlier, they'll have a lower pension or need to save up the difference.

The alternative is a lower accrual rate payable at a lower age.......

report this

chris sullivan via mobile

May 08, 2012 at 18:29

Michelle says that those earning over £150k should pay more tax so to be fair in future all public sector pensions should be calculated as if they were equivalent taxable salary and also pay 50% tax on those contributions rather than them being tax free paid directly into the index linked guaranteed pension. Not well explained but you get my drift. What is sauce for the goose....

report this


May 08, 2012 at 18:42

I have a similar viewpoint to Annabel. DC Pension and they can retire at 60 if they wish but they need to think of a second career option as the older we get the less efficient we are which does not help our existing employer, even though we are reliable. Where the innovation should click in is the ability to contribute to your long-term employers DC Pension Scheme whilst on your second career. Time limitations could be introduced, say, minimum 25 years with your main employer and a maximum of say 8 years (pro-rata if part-time) with your last employer. I hope this idea is not against the Human Rights Act!!

DC yes but we need to help these people along the way.

report this


May 08, 2012 at 18:45

Well said Mark, and grow up Rose.

Agreed that firemen and police do a very physical job, as do some nurses. However, retiring at 50 doesn't mean that they are incapable of working and adding to their nest eggs, so the pension pots should be adjusted accordingly.

It is only right that the public sector should have a fair bit of the swaddling removed and that they contribute more to the provision for their twilight years, even after they take 'retirement' at 50, or whatever. Labourers etc don't retire at 50, they have to keep on working.

Now as for MPs, there are a bunch of leeches, just 15 years to earn a full and very handsome pension, time for a sea change!

report this

Alasdair Lawrance

May 08, 2012 at 19:04

Yet again we have the normal right-wing inaccuracies and dis-information about public service pensions.

1) Many public service pension schemes are not a drain on the tax payer, because they're fully funded. Get your researcher to check your facts, as you're obviously too lazy to do it yourself.

2) Most PPs pensions are in the region of £4k - £6k pa. Why? Because most pensioners are women who have shorter periods of employment at lower wages.

3). It is not true that "the state cannot fund decades of retirement". The state, and in this case the Conservative led coalition CHOOSES not to fund a decent pension for the population.

4) Amongst many others, I fail to see the logic of ordinary workers being made to pay for the greed and incompetence of the world-wide financial sector. Please stop this "all in it to gether" nonsense

report this

Jo Public

May 08, 2012 at 19:21

Personally I don't trust the statistics. When they say "we" are all going to live into our 90s ... do they mean us? Or are they talking about well off people who can afford to eat nicely, outsource stress to nannies and accountants, and generally look after themselves? More than half the funerals I've been to were for people under 65 ...

report this


May 08, 2012 at 19:33

It is not difficult for the Conserative led coalition to CHOOSE not to fund a decent pension for the population when, on taking office they found that they were faced with a national debt of many thousands of millions of pounds. This of course, brought about by the previous Labour government being so very generous to , not only the UK population but also to many millions of people throughout the world. Now an awful lot of this money had been borrowed and it has to be paid back. That brings with it a problem.....Where is this money coming from should they CHOOSE to fund a decent pension as described by A.L. for the population? I am sure that the Conservative led coalition would be delighted to hear Alasdair Lawance's solution to the problem. I'm pretty sure that he will think it 'Fair' that someone else other than himself does the coughing up!

report this

mark jukes

May 08, 2012 at 21:49


Its not right wing posturing "but Public service pensions are fully funded and not a drain on the taxpayer" - just who exactly is funding them? certainly not the policemen, teachers and doctors!

Most private pensioners are women??

Agreed all PPs are being made to pay for the greed and failures of the financial system but this was compounded by the incompetence of the last administration who seemed unable to understand how to at least try to balance the books in the boom years.

This country is in a mess and we are all going to have to suffer to get through it (not just the working class in the private sector) - unfortunately the public sector refuses point blank to accept this and no matter how much wealth you take off the top 5% it will not be anywhere near enough to make a difference.

I sincerely believe that the time for retirement at 60 or 65 is gone now - time to accept it.

report this


May 08, 2012 at 22:59

I have to agree with Rose G. The person who wrote this article is obviously out of touch with reality and has no idea what it is like to be in your 60s and still working. Though I consider myself to a be a young 64 I live in the real world and am well aware of the infirmities that may advanced years bring with them. I had always stated that I would never retire but now find myself looking forward to the day when I can afford to do just that although that now seems to be getting further and further away.

report this


May 08, 2012 at 23:22

Rose G

Checked the tint in your glasses lately?

Of course no-one expects people in active/physical/dangerous work to continue in those activities to a PROPER retirement age, but there's no reason why they need to prematurely "retire", ie terminate their active contribution to UK plc, just as they reach the peak of their skills. Same goes for armed forces.

They should be deployed on lighter duties in later years, checking quality, compliance with HSE quality audits, training the younger element etc etc

Have you ever followed how quickly our services assimilate and react to HSE inspection findings?

Germany has it right - we need austerity and all those in occupations which might be considered an "overhead" need to sharpen up their public service delivery, rather than sit on their hands, telling people making a more productive contribution how to live!

report this


May 08, 2012 at 23:57

Those who think asking the public secrro to retire later, pay more and have more affordable pensions is wrong should understand that this is not political but simply maths. And they should remember that thousands of public employees are being paid for by the additional tax on pension funds and the huge profit the treasury made from the bad debts of the banks Again the shareholders took the hit - ie pension and savings funds in the main.And then the savings the treasury are making by keeping interest rates artificially low hits pension funds and annuities, but lets the government have more money for public expenditure ( employment). So those who rely on the performance of pension funds and annuities for their pensions are being hit by a multitude of factors on which publc employees are not only immune, but which actually benefits them.

Why is it that these greedy people think that they can enjoy more and more years of retirement on generous pensions at the expense of the rest of the population, who have seen their projected annuities more than halve?

And I know of several ex police and firemen who have retired and are now doing another job. Those in the private sector know that job security has been a problem for many years, and have to face up to periods of unemployment whilst they can find something to make ends meet without the support of a pension which is enough to live on by itself.

Remember that it costs £35,000 for every £1,000 pa pension to retire at 60, and this figure is rising.So an average teacher, fireman, nurse or binman is effectively retiring with a pot of £500,000 to £700.000. Those in the private sector would find it very hard to build up such a sum,needing to put 25% or more of their salary into a fund for 40 years. And, of course, there are many top earners in public employment whose pensions are worth a few million - but are they taxed on the full contributions like higher rate private employees? Is there a cap on the fund before tax relief is withdrawn? Of course not.

Alasdair - point (1) - so the taxpayer did not fund these few solvent funds then? Which ones are they? For example West Midlands Police have a pension deficit of £4,000,000,000 - around 10 times their annual operating cost and are insolvent by the same amount. This is typical of so many public pension "funds" (liabilities).

Point (2) - not sure what is meant here. If it is that many women work in lower jobs for a few years and hence get low pensions (but still fantastic for the total years they worked) then this has nothing whatsoever to do with the issue. The maths is the same - all pro rata.

Point (3) - everyone has a choice, and perhaps you fail to understand that Jo Public is calling enough is enough - see above. And you fail to acknowledge that Lord Hutton - appointed by the previous Labout Government - recommended all of this - in fact he was more stringent and he suggested that even that might not be enough. So You and Rose - stop blaming the Coalition, and start to be logical and understand the maths.

report this

grahame wills

May 09, 2012 at 07:03

You obviously are a Daily Mail Reader! Public sectore Pensions are not "Gold Plated" please read the Hutton report. Also normal retirement age is most schemes, certainly the Local Govt. scheme is 65 not 60. Also the scheme is fully funded.

Another lazy, inadequately unresearched artticle paying to the prejudices of the Mail/Sun readers. I expect more from Citywire!

report this

grahame wills

May 09, 2012 at 07:03

You obviously are a Daily Mail Reader! Public sector Pensions are not "Gold Plated" please read the Hutton report. Also normal retirement age is most schemes, certainly the Local Govt. scheme is 65 not 60. Also the scheme is fully funded.

Another lazy, inadequately unresearched artticle paying to the prejudices of the Mail/Sun readers. I expect more from Citywire!

report this


May 09, 2012 at 09:03


Calling it the LG scheme is unhelpful!

By far the largest pension bill in any LA is the teachers' which is unfunded and mostly paid out of HMG Revenue.

Generalisations are NEVER helpful!

report this


May 09, 2012 at 10:51

GW - I would rather be lazy than ignorant !! :-) Look at


The Actuarial statistics have got worse since with longer life expectancy calculations and lower long term interest rates

As we know the trustees attempt to play down the deficit through the use of actuarial smoke and mirrors and old statistics. But in the private fund market annuities are based on much more conservative actuarial calculations. The fund managers want to stay in business and cannot call on the taxpayer if they get their calculations wrong !.

I will refrain from pigeon-holing you as to your reading list

report this

grahame wills

May 09, 2012 at 11:12


I didn't call it the LG scheme just brought to attention the normal retirement age for that scheme!

The article itself is a generalisation, it lumps all public sector schemes together, that's why I made the comments re the LG scheme.

report this


May 09, 2012 at 12:22

Don't take it personally GW!

BUT you did miss the point!

[Which was that the most significant LA, LG, Local Gvt, whatever label scheme within the LA circus is the teachers' which is largely unfunded.]

report this

mark jukes

May 09, 2012 at 12:23

GW & others.

Seems like a good percentage of people above seem to disagree with you. Do you think everyone who disagrees with your view reads the Daily Mail or the Sun?

Only public sector workers and members of their families are against these pension changes, unfortunately the size of the public sector has been allowed to balloon out of control and now accounts for over 50% of the workforce.

This gives them an enormous advantage when holding the rest of us to ransom.

Taxing the rich to any extreme would drive them to other countries (apart from footballers) and would not raise enough money to solve the problem - its just a sound bite.

Can anyone here tell me how this is going to work if we do not make these changes?

report this

Rose G

May 09, 2012 at 14:30

Bottom line is that the bankers & politicians have benefitted from their profligacy (Blair for example) probably earns more now than he did ever before! Why should he still be entitled to his gold plated pension?

If & when I hear that politicians are also going to be having their pensions reviewed, when the fat cat bankers are brought to justice for their wrong doing, I would probably be happy to pay my share, until then, I am definitely not going to roll over so then can screw us over!

There is no need for the austerity in the UK, it is only being done because of political ideology!

report this


May 09, 2012 at 14:51

Get real RG and take those tinted glasses off!

We cannot afford to continue to live on borrowings! And at least DC is trying to rein those in.

Do you really want us to follow Greece into being a third world state which no international bank or fund will touch with a bargepole?

I don't care much for greedy fatcats or politicians either, but they keep stimulating the public's greed for higher standard of living than it can afford so they can mask their own profligacy and short termism! Oh and of course so they collect voters' brownie points too!

report this


May 09, 2012 at 15:22

Rose - did you do maths at school? If you spend too much and get into debt do you not pull back a bit to pay the debt off?

As I have previously pointed out the main beneficiaries of the bank loan defaults was the Treasury and the false boom was taken as "prosperity" by one Gordon Brown who spent all of the extra tax receipts on more public jobs and incredible pay rises (eg GPs). The main losers were pension and savings funds. But perhaps with your view you cannot work this out.

Yes, the fatcats had a field day and it would be good to recover the excess pay, but that is just a sideshow compared with our continuing deficit. The present "austerity" measures are still not enough to stop us going further into the red.

But then perhaps you are one of those people who live beyond their means, and then expect others to take losses to bail you out ???

report this


May 09, 2012 at 21:10

The public sector have had it far too good for too long. Police, firemen in fact any public sector employee who can at present retire on a full pension (well) below the normal retirement age 60+/65 & rising, should have their pension cut proportionally, using an average of private sector acturies tables.

The private sector have been hit with the realities of life. If you do not save for retirement, you cannnot expect any more than the basic state pension at the state retirement age + benefit allowances as appropriate.

It is about time that the public sector were brought down to earth. Why pay a pension to someone who is going to go out to work again.

Apart from drastic cuts in the higher end of public sector salaries, those that chose to take employment after taking retirement at an age lower than the normal retirement age, should have their pensions stopped until they retire completely. The alternative being that they provide their time for free to a charity.

Public sector pensions are in effect Ponzi schemes, sooner or later the money will run out & then the sh1t will hit the fan. Self fundin in the public sector, to use Rose's description, it's bollocks!!!

Look what happens to any Labour administration. It lasts as long as the money does, then someone else has to step in & straighten the books out. The British electorate never learn, if they did there would never be another Labour government

report this


May 10, 2012 at 09:46

My concern is that in order to repay all of the debts that the Gordon Brown and Ed Balls incurred, the Conservative administration will make themselves very unpopular in trying to staighten out this desperate mess! This could provide the opportunity for another Labour government to get us into another mess and so on and so on! Maybe the Conservatives should straighten out only half of the mess and then should Labour be re-elected they would themselves have to face the music!

report this

mark jukes

May 10, 2012 at 10:25

I know - so there's not enough money to go around

Take all the pensions - private and public workers - and put them in a big pot. Then share it out equally to all people retiring.

That would be totally fair - nobody could deny that.

There would probably be enough to give everybody a small, but reasonable, pension it could even raise a few out of the poverty that faces them in old age.

Cant believe this hasn't been thought of before!

Trouble is it would mean my pension entitlements would double and some guy doing an equal job in the public sector to mine would have his halved.

.......I guess it couldn't happen because that guy is twice as important than me and deserves a lot more in his old age.

report this


May 11, 2012 at 00:40

So I have been told!

report this

HR Man

May 13, 2012 at 08:51

Where Michelle really does have it wrong in my view is that she misunderstands the point about the impact of later retirement ages on younger people.

The point here is that previously people would retire at say 60 or 65 because their pension would be sufficient for them to enjoy the rest of their lives. That allowed the jobs they vacated to be offered up to younger people but because people will need to work longer that means that those jobs will not become vacant and the opportunities for younger people to work will be greatly diminished.

Also the recent EAT ruling on age retirement DOES allow employers to compulsory retire people when the reasons for it are clearly defined i.e. that it is part of a refreshment of the workforce etc

report this

Chris - 1

May 13, 2012 at 09:40

In May 2010 the Rt Hon Liam Byrne MP left a note for his successor 'there's no money left'. I believe that Mr Byrne was a Labour MP? I find it quite astounding that many forget that under the last labour government it was Spend, Spend, Spend. Yet how quickly some people forget.

My father in-law retired from the fire brigade on a near full pension at the age of 50. Not bad some may say. He turned 75 last week and it looks like he will live longer than me. (But good luck to him) But the simple reality is is that even he accepts that he has and is receiving far more from his pension than he ever contributed.

He is also very thankful for the NHS which he uses whenever he needs to. The only inconvenience is that he needs to get his appointments right so that he can book a cheap return flight back from Spain.

I on the other hand chose to go self-employed. (My choice) I work bl**dy hard but I will have no where near the pension that my father-in-law receives. I will also work for much longer. I fully accept this as it was my choice and I enjoy what I do.

The problem is many people have come to expect a lot from the state and seem to believe they have this god given right to have what ever they feel they should have. But when you take, you are taking it from me. The government has nothing, it is merely a custodian of our money.

report this


May 13, 2012 at 11:43

Although the article develops other avenues e.g. life expectancy, better health etc.

Isn't the main focus funding?

I fully accept the inequality created by those less than worthy in our society that need to contribute more whilst their industries also need to find a level of earnings that is less exploitive of the wider society so if the unions and public sector workers were protesting against that......?

But putting that to one side surely we can all retire at whatever age we want to if we can fund it, which might involve some personally sourced savings etc.

So are the unions really suggesting that their non-public sector union members continue to fund a pension entitlement over and above their own (private sector worker) so that their public sector working neighbours can retire earlier than themselves on a better taxpayer funded benefit?

I think the division has already been created by this previously unspoken expectation so at least the inequality has been recognised by the government who are at least confronting "some" of the big decisions in the austerity drive.

I also didn't see any of them mobilising to campaign for equitable life members or any other failed private pension scheme, nor do I see them campaigning against artificially low interest rates and the impact that this might have on anyone supplementing a retirement income whilst the profligacy in our society continues.

report this

David 111

May 13, 2012 at 12:51

Is everyone in the private sector expecting to work until they are 68 and content with that prospect?

report this

Anonymous 1 needed this 'off the record'

May 13, 2012 at 13:52

I am expecting to, without doubt, provided that my small business survives. If it does, at least I can choose when to wind down.

The contentedness comes from the fact that I know that I am paying my way, I can hold my head up high, I am enjoying my work, it provides a service which contributes to the financial strength of this country. Sadly, it is only a very small contribution, due to its size.

report this


May 13, 2012 at 16:55

MJ, grow up.

My SIPP pot was halved by that one eyed snot gobbling ogre and his daft spherical side kick (aided and abetted by a cooper and others).

Now you want to grab that as well. You probably own nothing, so if I suggested that you add your property to the pot it would make no difference. I think they called that policy communism, and the only people who benefited were the top echelon and all of the had their palatial daschas in different parts of the country, all paid for by the plebs.

report this


May 13, 2012 at 22:05

I buy the unions' argument about jobs for young people. We all rely on the person "above" us to move up or out to have that opportunity. This argument that that doesn't work because old people over 65 continue to work and you cannot discriminate is easy to resolve: making a taxable clawback on their state pension say £1 for every £5 paid from a job. Those who want to retire can do so and those who choose to work have their pension income derated according to pay and maybe get a small enhanced payment later say above age of 70 for the derating. So if you want to retire and not continue working, you can enjoy the fruits of your labour. Seems fairer to me than expecting everyone to work longer to 68 or more without a pension. I am not an expert on pensions so the numbers are examples, but I wondered if anyone had explored this as a concept?

report this


May 13, 2012 at 23:18

Roo - you can already defer your state pension and then get an enhancement later on. In fact it is a very good deal (around 10%) compared with current annuity rates.

report this


May 14, 2012 at 10:50

Jon - Thanks, I didn't know that. But this is not about a straight deferral, this is about encouraging pensioners not to occupy work positions that young people could have. Could it work that way with clawbacks?

report this

lewis via mobile

May 15, 2012 at 22:39

This has probably already been covered in one way or another but wouldn't having people working longer actually cost more. A person with 40 or so years in an occupation will in most cases be on a higher salary then someone who us just starting out. The more older people in work, the more younger people there are who are out of work and are in benefits. Maybe the retirement age should be dropped or pensions increased with funding coming from the savings made from less unemployed young people.

Mark jukes, what a fantastic idea. That way someone who has struggled to fund their pension and made many sacrifices in doing so ( such as holidays, nights out etc) could receive the same pension as someone who didn't plan ahead and never saved a penny.

report this

graham tremble

Jun 07, 2012 at 17:22

What a load of selfish claptrap. Why on earth are the public sector individuals trying to pursuade the private sector workers that their funding of their retirement is a good deal for them! Unbelieveable conceit.

report this


Dec 17, 2013 at 17:23

... and so it continues (December 2013).

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

Sponsored By:

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add to your safe senders list so we don't get junked.

Latest from Investment Basics

See all headlines

Sorry, this link is not
quite ready yet