UK: "As an ageing society, we can no longer afford to retire so young"

. LONDON, England / The Times / Money / July 18, 2009 You can forget about early retirement By Andrew Ellson Governments rarely act out of benevolence. Even less so when they are in debt to the tune of almost £800 billion. So it was this week when the Department for Work and Pensions decided to bring forward a review of the compulsory age of retirement. At present, companies are allowed to get rid of workers once they reach the age of 65. The Government is minded to lift this restriction, giving employees the right to carry on working for as long as they are willing and able. But this decision is nothing to do with ending age discrimination, as ministers may want us to believe. The reality is that, as an ageing society, we can no longer afford to retire so young. The demographic problems are plain to see. Currently, there are four workers to support every person over the age of 65. By 2060 there will be only two. Irrespective of how much we save as a society, the numbers simply do not add up. The reducing pool of younger people available to provide the goods and services that pensioners will need means that workers will be able to demand higher wages in future. The result is that these goods and services will become more expensive. This inflationary effect will erode the real value of pension savings, meaning that even those who have put some money aside will be less well off than they expect. The problem will be exacerbated because workers will also face a higher tax burden to pay for the state pension. That is not to say saving for retirement is pointless. On a macroeconomic level, money diverted from consumption now will be invested, however indirectly, in new technologies and efficiencies that will ultimately mean that fewer workers are needed to provide for the elderly. On a more personal level, there is also an incentive to save because the more money you put aside, the better position you will be in, relative to the rest of society, to afford the goods and services that you need when you retire. Ultimately, for society as a whole, there are only three ways to lessen the damage that the demographic time bomb will cause. The first is to increase the birth rate so there are more workers to provide for the elderly. The second is to allow large-scale immigration from younger societies. (Turkey, which has a very young demographic structure, could provide the workers that an ageing Western Europe needs.) The third, and easiest option, is to increase the length of our working lives, which is exactly what the Government took another tentative step towards this week. The age at which workers can claim the basic state pension is already set to rise to 68 by 2050. It will probably rise again before too long. The one possible benefit of allowing people to work longer is that it may, perversely, encourage companies to improve their pension provision. Most employers do not want the Government to remove the compulsory retirement age because they worry about being left with staff who they perceive to be less motivated than younger employees. If companies cannot force out workers at 65, the only alternative will be to offer a decent pension to encourage voluntary retirement. Sadly, however, there is no sign of this happening yet, with more companies than ever withdrawing pension benefits. If you do not enjoy your job, it may be time to rethink your career because you could be working for longer than you expect. Lame excuses for such poor customer service If you happen to bank with Alliance & Leicester, Abbey or NatWest, buy your energy from npower and your telecommunications from BT, you have my greatest sympathies. Why? Because these companies hold the ignominious distinction of being the five worst for customer service, at least if our Troubleshooter mailbag is anything to go by. BT is the standout leader in our list of shame. Connection problems and customer service standards that would embarrass North Korea have made the former monopoly supplier the subject of your wrath. The company says that a “systems upgrade” was the cause of most of the problems; an excuse also wheeled out by npower and Abbey. In each case, the companies say the problems with their new technology have now been largely fixed. We shall see. Another excuse trotted out was that big companies receive a large number of complaints because they have such a large number of customers. But that analysis does not hold true. Alliance & Leicester, for example, has only about 3 per cent of the current account market, yet we received more complaints about it than HBOS and Lloyds TSB put together, which between them account for almost a third of the market. It’s a similar story in the energy industry. Npower is only the fourth-largest supplier, yet it is head and shoulders above rivals when it comes to customer dissatisfaction. If only banks, telecoms companies and energy suppliers were as good at customer service as they are at making excuses. Sadly, they are not, so customers should show caution before switching to any of the businesses in our list of shame. We will report back in six months to see if the same companies still top our list. If they do, their excuses will look even more ridiculous than they do now.[rc] Copyright 2009 Times Newspapers Ltd.