The Budget is done. The annual state of the union (more on that story in September) is complete and with all the rabbits running fast from the Chancellors speech on Wednesday there was a lot to digest or even dream about.
One of the biggest questions yet to be fully answered for the 21st century just got a little harder. The question is how are we going to pay for our increasing years of old age and potential poor heath in our later years? The Government now says that you and me can now be trusted with our pension pots. We can invest it, spend it, by a Lamborghini, put it all on red or black or even take it racing and bet it on the 3.40 at Kempton Park. Oh what fun. The reality is very different. Your pension pot, should you have one, has to pay the bills you pay now, but without a monthly income from the work you do. If not there is a state pension of £145 to come and, err, that’s it.
Here is the reality. The number of people living in the UK aged 100 increased by 73% in the decade to 2012. The Office for National Statistics say that in 2012 there were 13,350 centenarians living in Britain, up from 7,740 in 2002. Life expectancy in Britain has reached its highest level on record for both males and females and a newborn boy could live 78.7 years, a girl for 82.6 years, if mortality rates stay the same. They won’t. They will get better.
It gets worse. A man aged 65 in the UK now could expect to live for a further 18.2 years, a 40% increase on the 30 years ago while a 65-year-old woman could carry on for 20.7 years. Many years to pay for and will that be living or just existing? Who is going to pay for these years? You? The state? Your children? The tooth fairy? Probably it’s a combination of all of the above and more.
One reality is that we are all in this together and we all need to plan how we are going to pay for it. Working longer is one certainty and this already happening with over one million over the age of 65 now in full-time employment and 300,000 over 70 still working. Those numbers will grow and, in reality, it’s the way it was generations back. You worked, you retired, you had a few years of retirement, then you died. 20 plus years of doing nothing is, frankly, just not possible and we all need to grasp this and plan accordingly.
While on the subject of ‘all in this together’ one other thing sticks out from this years budget and the Her Majesty’s Oppositions response. By 2015 over 3 million will pay no income tax at all yet the bankers bonus could pay for everything if it were taxed more. This seems so simple; to tax the rich more so that those who don’t have the earnings don’t have to pay anything.
Here are my two questions. If the top 1% of earners pay one-third of all the income tax taken in the UK how much more should they pay? And with 3.2 million paying no income tax from 2015, just how many bankers and their big bonuses are there? The Pensions Minister couldn’t answer that question from me this week. Can anyone?
If we really are all in this together and we all use the NHS free at the point of delivery, education free to all and a vast range of public services freely shouldn’t we all pay for it and not just rely on the middle or top earners to pay the majority?
Maybe we are just all in it, but not together.