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Forcing people to retire later poses psychological concerns

You do not need to be a professor of psychology to know that being forced to work later in life than you want to is depressing. But the current debate on pension reform in the UK has so far only skimmed the surface of the emotional effects of individuals affected by it.

For some women who will see their state retirement age accelerated in the coming years, an old age beset by mental health problems now beckons.

A report entitled Shattered Dreams: The Effects of Changing the Pensions System Late in the Game, written by Dutch academics, makes grim reading and should cause policymakers to think again about the psychological damage of foisting big changes on to people late in life when they have little time to do anything about them.

The findings are of particular relevance to those women who will see their state pension age increase quickly as a result of the acceleration of reforms just passed by Parliament.

The paper shows shocking increases in depression and mental illness among those who have their pensions changed close to their retirement. It reveals a 40 per cent increase in depression and mental health problems for those caught by the 2006 changes to the Dutch public sector pension system, compared to those unaffected.

Dutch public sector workers born after January 1, 1950 were told they would have to contribute more and work a further 13 months to achieve the same pension income as those born before that date.

Researchers concluded that post-retirement health worsens when individuals are induced to extend their working lives longer than they want to.

The report also found that feelings of unfair treatment was one of the key drivers. Those employees who felt they had been cheated in the final chapter of their working lives and that the retirement goalposts had been unfairly moved when they were within touching distance, were significantly more likely to suffer mental health problems.

We all know the Government has got to tighten the purse strings when it comes to the trillion pounds or more of public sector pension liabilities. And given the Dutch academics’ findings, policymakers should also factor in the feelings of resentment and pension envy of the millions retiring on poor defined contribution pensions before getting too hung up on cutting back on the more generous of the gold-plated public sector ones.

For the 333,000 women who will see their pension age move by a year or more within seven years, the sense of injustice will be palpable. Around 33,000 of them will see their pension age increase by about two years.

The Shattered Dreams report considered the effect of all workers having to work a further 13 months to achieve the same benefit. But those affected by the changes had the option of retiring but on a bit less money in an already generous scheme.

In the UK we have a jilted subset facing an increase of nearly double that and without the option of retiring on time on less money. On top of that, women are less likely to have savings from other sources or the disposable income to increase their retirement assets in such a short period of time.

It would seem likely we can expect an even greater increased rate of mental health problems among our soon-to-be-retired women. I wonder if that has been factored into the overall cost. Campaigners should keep up the pressure.

John Greenwood is editor of Corporate Adviser


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There are 11 comments at the moment, we would love to hear your opinion too.

  1. However true – do we not also have to look at the other side of the coin – related specifically to the dependency ratio?

    This is an extract from the Office of National Statistics

    As the UK population ages, the old age dependency ratio – which measures the number of people of State Pension Age (SPA) and over for every 1,000 people of working age – is projected to rise. The ratio was steady at around 300 from the mid-1970s to 2006, but reached 310 in 2008 and, in the absence of any increases in SPA, would be expected to reach 495 by 2051. With the increases in SPA which are due to take place between 2010 and 2046 under current legislation, the old age dependency ratio is expected to be 343 in 2051.

    From here:

    Had there been no change, then at with a dependency ratio of 495 per 1000, nearly half, my guess it would be those in work who were more than likely to crack up!

  2. I can relate totally to this article, I am involved in the campaign opposing this cruel addition of up to 2 years onto the working lives of women who have already cheerfully accepted a 4 year increase (in my case it’s another 1 year 11 months) since I’ve known about this I have had an increasing sense of depression which even causes me physical symptoms, I feel as though all I have done in working since the age of 15 is brushed off as worthless and I’m regarded as a mere work horse, picked in a small group be worked to death just to rush through the SPA increase. I feel as though my life and my future are not mine to plan because the government has decided on a complete U turn on it’s promises so that it can balance the books. I feel depressed at the worry of how I will manage to work in a sometimes physically demanding job to the age of 66, I feel resentful to be told that I “might” qualify for working age benefits, I “might” qualify for sickness benefit, I “might” qualify for unemployment benefit – but only for a short time. Why should I have to be stressed about qualifying for benefits when I should be able to retire and claim the pension I will have paid towards for 49 years if I was able to retire at 64 as promised? This may sound self pitying – well it IS just that, I do feel sorry for myself, I AM depressed about this, I DO feel bullied, powerless, resentful and revengeful, I am not exaggerating when I say this is on my mind 24 hours a day.

  3. Thank you Barbara. Now think about all those men who have always had to wait until 65 while working women retired at 60 and those who are self employed and can find that the performance of their pension suddenly means they cannot afford to retire. Now can we please have a study of why men die younger. Perhaps we can also have a proper study of the stress and illness caused to older advisers by the Regulators RDR. They have to spend many extra hours in addition to earning a living taking exams and changing their whole remuneration under the threat of losing their livelihood if they fail. Some have no choice but to work on until Im 70 or more because they do not have a publicly funded pension. Even this option is now being threatened by Regulation.

  4. All the hand wringing in the world won’t change the facts:-

    1. The populous generally is living longer and longevity is increasing every year. This makes pensions more expensive.

    2. The ratio of working people paying NIC to those who’ve retired and who are no longer paying NIC is widening. As a result, State (and Public Sector) Pensions are becoming increasingly unaffordable.

    3. EVERYTHING is getting more expensive.

    4. People need to take greater responsibility for their own long term financial wellbeing. That means starting to save early in life, even if it’s only £20 p.m.

    5. The government needs to honour its pre-election promises to undo the damage done to pensions, and to public confidence in them, by its various predecessors in general and by Labour in particular.

    6. People need to disabuse themselves of the assumption that the State (i.e. everyone else) will ensure they have a financially comfortable retirement.

    7. The NEST Scheme isn’t going to be the solution. All it is is a privatised (and inferior) money purchase substitute for the Earnings Related tier of the State Pension.

    8. A flat rate State Pension of £140 p.w. for all with nobody losing out in the short term is a noble but ultimately unaffordable aspiration.

    A colleague (a former school colleague, as it happens) told me the other day that the sum he sets aside towards his retirement (coincidentally, almost exactly the same as I myself set aside) is way greater than any of his clients.

    In short ~ people have to wake up to the harshly changing financial realities of life.

  5. As an individual in my twenties I am watching these changes go through and seeing both stress and relief on my parents and their friends faces as circumstances change away from decades of planning. I also look at these changes to pensionable age anticipating that me my peers will not be able to retire until our late seventies. From my research into the ageing of society I can understand the need for the rise, yet also feel the strain it will cause individuals. For myself and a few friends, we feel the only way we could physically and mentally cope with such a rise in pensionable age, would be to have regular sabbaticals allowing us to recuperate. Given the opportunity of a sabbatical, would other generations agree this to be a viable option?

  6. To Mr Anonymous. You are missing the point. I feel exactly as Barbara does. We are not justifying the historical position or eventual equalisation but many thousands of women are suddenly facing an increase of an extra two years LESS than seven years from retirement. I think if your pension age was over three years older than others only one year older than you, you might feel a bit depressed to put it mildly. And don’t forget, most women our age do not have private pensions either and we have already faced an increase of four years longer than we expected. Plus this is a gross betrayal of an explicit pledge in the Coalition agreement not to increase women’s pension ages before 2020.

  7. I agree with Barbara I too am one of the women worst affected by these changes. Its easy to blame us for not saving for our futures but I have never had a job that provided a pension or had the means to provide one for myself,but I have worked hard and paid my contributions. I know that is nothing special thousands of people have. Then we always get the serves you right brigade” men have always worked till 65 and you wanted equality”. Well its not our fault that the ages were set at 60/65 and this was being addressed in a fair and measured way. I had 4 years added to my retirement and accepted that without complaint. Now the goalposts are being moved again. I am very upset by this and yes it does have an affect.I feel that my work over the years has counted for nothing. I don’t assume that the state {i.e everyone else} will provide my retirement I did assume that I was part of the state or don’t my contributions count? This pension proposal is unfair We are not the cause of the problems and discriminating against us is not the solution

  8. A very good and thought provoking article !
    Of course this will mentally affect the women who thought from 15 years of age they would retire at 60.They uncomplainingly accepted the first age rise but who can blame them for feeling victimised at this proposed rushed through second age rise ! They worked from when there was no equality of wages with men and no chance to save for a private pension. Many have/are still, helping with childcare or caring for their aged parents on top of going out to work.Many have age related complaints.It is grossly unfair to target one group of women when so many young people are depressed at being unemployed because there are no jobs for them.Surely it would make economic sense for older people to retire as planned and therefore free up jobs for young people instead of them living on benefits contributed to by those people who have worked all their lives !

  9. Dear Mike, Anonymous and Julian

    You are quite right, the SRA should be increased and of course the anomaly of women and men retiring at different ages should be rectified. I think you will find that all the women affected by the accelerated increase in pension age all agree with this.

    However, what we do take issue with is THE Acceleration OF STATE PENSION AGE.

    If I knew that I would be retiring at age 65 when I started work in 1970 I would have made plans accordingly and of course accepted that. I have worked in the finance/insurance industry most of my life, and understand the need for careful planning. I have tried to do just that. I have worked for the last 40 years in administrative jobs that do not pay huge salaries (I am not hand wringing here, but just realistic in that when I left school women were expected in the main to be typists or the like before they got married and had children. Remember, this was before the Equality Act in the middle seventies! ) . So, I worked out my plans (and took out private pension policies which are extremely modest and being eroded all the time with stock market crashes etc.) based on the fact that my SPA would be 60. There was no reason to think otherwise. So, when the last government changed the SRA to 64 I was not pleased, but accepted it was necessary and tried to save a bit more to cope with the extra 4 years with no State pension. But when the news came through that we now had to wait another two years, to 66, that was a horrible blow. THERE IS NOT ENOUGH TIME TO SAVE FOR THIS. Now you could say, just work until you are 66 – fine, if you can get a job!

    This change has gone against the Coalition Agreement, it is targeting a relatively small group of women and yes, it is not fair. It’s not just me saying so, it’s Age UK, Saga and bodies such as The Pensions Policy Institute – in their ‘Submission to the Work and Pensions Select committee on the Government’s Pensions Reforms’ they clearly stated that policymakers should give women more than ten years notice of any future SPA changes to allow them sufficient time to adjust their retirement plans, or to save more while still working.

    So I do feel that an injustice is being done here, the Coalition government ignores all the evidence presented to them and they even go against their own Agreement to try to save a bit more money supposedly to bring down the deficit – which doesn’t make sense as George Osborne tells us that he will get the ‘books balanced’ by 2015 which is before our bit kicks in.

    I, and the group of women affected by this, feel abandoned by the government – left to sink or swim despite careful planning.

  10. Thanks Julian and ‘Anonymous’ for pointing out that these problems are just the tip of the iceberg. I feel much more cheerful now. There are also children starving in Africa. Just because we all know that these problems are real and intransigent shouldn’t stop us from acknowledging them and doing what we can. We’re all ‘awake’ to ‘the harshly changing financial realities of life’ so how about being a little less condescending and thinking about contributing to solutions?

  11. Perhaps the knowledge that they are living longer (both longer than they used to, and longer than men do) will alleviate some of the hardship of living longer. Why is it that some people can only ever see the negative?

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