Beveridge: Change14 Retirement Pension

Change 14. Making of pensions, other than industrial, conditional on retirement from work and rising in value with each year of continued contribution after the.minimum age of retire­ment, that is to say, after 65 for men and 60 for women.

133. The grounds for this proposal are set out in the general discussion of the Problem of Age in Section 2 of Part III.   Briefly, they are:

(1) that making retirement from work a condition of pension is a logical consequence of giving adequate pensions ;

(2) that giving to each individual an incentive to continue at work so long as he can, in place of retiring, is a necessary attempt to lighten the burden that will otherwise fall on the British community, through the large and growing proportion of people at the higher ages;

(3) that the age to which men can go on working with satisfaction to  themselves and advantage to the community varies with every individual and from one occupation to another.   The proposal to make the age of retirement flexible meets human as well as economic realities.    Adequate pensions with a flexible age of retirement will increase happiness and wealth in many ways.    Early retirement of men on pension is not wanted or useful as a cure for unemploy­ment.   On the contrary, there should be as few idle mouths as possible, at any age after childhood is past.   This general statement requires two glosses.

134. First, in any particular occupation there may be a   reason for enforcing early retirement and pension.    Some occupations—e.g. service in the Armed Forces or the police—are not suited for men past middle life.    In other occupations, e.g. the public service, it may be desirable to retire senior men before they are past work, in order that younger men may be able to get responsibility early enough to make good use of it.    But neither of these reasons applies with anything like the same force to the ordinary industrial and clerical occupations.

135. Second, to make the age of retirement flexible is one way of adjusting supply of labour to fluctuations in demand.    In times of good trade the older men will find it easier to keep their work and postpone retirement.    In times of bad trade they will tend to retire earlier and reduce the supply of labour; it is an essential part of the proposal that the period for which unemployment and disability benefit can be drawn after the minimum age of retirement should be restricted.

136. Minor but not unimportant advantages of the proposal as put here are (a) that it will facilitate enforcement of a retirement condition;  (b) that it will simplify administration by abolishing all exemptions for age ; and (c) that it will strengthen the finance of the Social Insurance Fund.

(a)    There is no difficulty in making retirement from the service of a particular employer a condition of drawing pension.   To enforce abstention from any kind of work as condition of a social security pension is less easy; but the proposal that an insured person should be able to get a larger pension if he postpones claiming it while working after pensionable age, should facilitate enforcement, since those who do postpone while they can work will get an advantage by doing so.    The practical problems of enforcing a retirement condition are discussed in para. 248.

(b)    Abolition of exemption on account of age will mean that persons continuing to work after 65 for men or 60 for women will contribute as   before,   on   ordinary   employment   books   or   occupation   cards (para. 354).

(c) The rate of increase of pension above the basic rate that is proposed for each year of postponement (para. 246), while it should be sufficient strongly to encourage postponement, is below the full actuarial value of postponement. (Appendix A, para. 20.)