People often think of the relationship between individual and state as a ‘contract’, which determines our rights and responsibilities. The right to universal education, but the responsibility as a parent to ensure our children are well behaved. The right to a safety net when out of work, but the responsibility to seek new employment.
Labour in government has worked hard to communicate these rights and responsibilities, recognizing that its policies will only be effective if they are understood and acted upon in our everyday lives. However, one of the most important ‘contracts’ between individual and state remains confused in many people’s minds, despite some very good reforms. This is the ‘retirement contract’.
Traditionally, there has been a clear link between paying our way during our working lives, and receiving a pension in return. The popularity of the ‘contributory principle’ was one of the reasons why government decided not to adopt a universal, citizen’s pension. And yet, research suggests that people are increasingly unclear about how the retirement contract is changing. For instance a third of adults think they will automatically get free home care in their old age. Indeed, it may be that opinion is polarizing – between those who think the state will do nothing and those who think the state will step in and bale us out. This is as true for care funding, as it has been for pensions.
The number of people over 80 is escalating, placing strain on public and private purses as well as on family members who provide the bulk of care. There is optimism that government will seriously examine the need for a new partnership on care funding. If they do, they will need to base a partnership on reformed services, which prolong independence and improve quality for the majority.
Yet despite what are often good policies and, I hope, good intentions in the coming spending review, government has not enjoyed the fruits of its reforms. The only message that has cut through so far is the one that we will all have to work for longer. Even this has been undermined by the government’s insistence on maintaining unnecessary compromises like the retention of mandatory retirement ages.
People now have a clearer idea of how global warming affects us, than they do about what our ageing society means in our day to day lives. To move forward, government needs to view retirement in the round, rather than just focus on pensions, and be clear about how rights and responsibilities are changing. Despite welcome pension reforms, there has been little frank talk to date about the implications for us all of an ageing population. The long-term challenges have been left to external bodies like the Pensions Commission to describe. And important changes are hidden behind a plethora of initiatives from different departments, which do little to stimulate debate. The impression has been that ageing is tangential, rather than at the heart of government.
Labour can’t afford to respond slowly to ageing. The first baby boomers have now reached state pension age and more of us are living longer. Older people will form a disproportionate part of the vote in the next General Election. The government has risen to the first major challenge of pension reform. Rather than seeing this as job done, it should view this as a first step in renegotiating the retirement contract.