Retirement: interview with Ros Altmann, director general of Saga
Peter Crush, October 11, 2011
Depending on what you read, Dr Ros Altmann, who was an adviser to the Number 10 Policy Unit and an ex-Chase Manhattan banker, is either “a thorn in [Gordon] Brown’s side” or an “indefatigable campaigner for justice”.
Spotting the crisis signs for retiring workers earlier than anyone else (she set up Pensions Action Group in 2004 and is credited with pressurising Parliament to vote for the establishment of the Pension Protection Fund), the current director general of over-50s group, Saga, has been brow-beating governments ever since. She has taken on the causes of everyone from Allied Steel workers to Equitable Life policy-holders (some 30,000 of whom have sadly died without ever getting their rightful money).
But when you meet Altmann, what you find is that pensions barely interest her at all, and that she is far more supportive of being able to work longer and not needing to rely on a pension in the first place. "The first baby boomers hit 65 this year," she says. "But the best decision the Government has ever made has been to remove the default retirement age (DRA)." For, despite being known as a campaigner for better pensions, Altmann has long argued most pensions will not provide any meaningful standard of living, and that longer working is the best answer. In fact, while she welcomes removal of a DRA ["I thought government would keep it, or at best raise it to 70," she admits], the fact it has taken this long still leaves a bitter aftertaste. "Lots of able people were got rid of from 2005 to now, just for reaching 65," she says rancorously - a reference to 2005, when, she says, the Labour administration resiled from voting for removing it. And even now, she fears the coalition has been motivated by other reasons: "There is no doubt that since then, the pensions crisis has naturally introduced the concept of working longer. I don't think the DRA would have gone without a pensions crisis helping it along. Government needs people not to retire now."
But despite being pleased the DRA is gone, Altmann is worried workers are in an odd holding-pen of being granted permission to work, but there also being a state pension age - which if it were up to her, would be even higher - and there still being prejudice against older workers. "I have no problem raising the pension age higher," she says, "because we have now got to a position where pension age is no longer retirement age. Pensions are simply paying people not to work. This is not affordable. I'd rather have people working, and for much longer." But, she adds, "employers need to do more to encourage longer working. HR has such a strong role in deciding what people can or cannot do, cutting down hours, and redefining people's roles. But," she says, "it is such an easy option to not do this and get rid of people. It happens all the time. It still happens; it's not supposed to."
What is stopping them, she argues, is partly a media-created notion there are millions of young people waiting to be given work, and that older people should step down to give them a chance. "This lump-of-labour-in-waiting just isn't here," she says. She knows the economic crisis and 20% unemployment among the young are not helping matters, but says employers have to focus on the older age group first. "They have most experience and they have the best skills. If older people are encouraged, at their workplaces, to stop working before they want to, we create a nation of people 'retiring' before they should, of people not having much money, not going out and buying things or going on holiday. This will damage all the businesses that 'do' employ young people. Stopping people working before they want too - even in a post-DRA age - is a recipe for economic decline," she adds.
Altmann is still smarting over not removing the DRA in 2005, because it is lost time where culture change could have happened earlier and "the stigma of growing older has been allowed to continue". Despite the actions of many trail-blazing businesses to promote older workers, she thinks it will still take time for the abolition of 'retirement' to sink in: "Why are businesses throwing people out? They need to use and encourage talent in a different way."
In July, the findings of the Dilnot Commission on Funding of Care and Support looked at the similar issue of care for the elderly, suggesting care costs be capped to ensure people do not lose their hard-earned assets, while also suggesting insurance companies come up with insurance-type products to guarantee an annual income in old age. But Altmann is sceptical of this too. "Dilnot is focusing on delivering care more than funding it, and I don't think you can divorce the two," she says. "You can argue about caps, or thresholds before people pay for it, but the thing is, people that never save money always win, and this isn't fair," she adds.
"That is why I come back to the fact that the key for older people is simply not to stop, but to carry on working and paying their way still. That way, there's money to live, work and for care costs." There's perhaps a clue in Saga originally standing for 'Social Amenities for the Golden Age'…
In all of this, though, there is actually one, large irony she says is playing out: "In many ways, business - the private sector particularly - was sold the idea of early retirement as something their workers should aspire to," she says. "It has been very damaging - that people can work less and that there is a money tree out there to pay their pension. Changes should have been made long ago, but weren't."
Altmann sounds pessimistic, but she is at pains to point out HRDs are the best placed to root out these stereotypes. And she closes with what might be seen as a controversial line of thinking: "For me, employers have a much more important role to play in encouraging their staff to work longer, than encouraging them to pay into their pensions," she says seriously. "Without a default retirement age, the main priority is the need to get rid of age discrimination." She adds: "I would much rather HRDs commit to this than pay another 3% into their staff's pensions. Getting people to produce something while being at work is a much better solution than paying people not to work."