Introduction
This article explores the complex relationship between ageing, risk and welfare in contemporary British society. We do this by interrogating the space between what has been coined the ‘risk society’ and the social policy implications for older people in relation to the extension of their working lives and the intensification to private pension schemes as an ‘exit feature’ (Powell, Reference Powell2014). At one level, the UK social policy of extending working life has been a significant outcome of the debate concerning the economic sustainability of ageing populations (Vickerstaff, Reference Vickerstaff2010). The need to keep Britain's ageing population economically active has prompted government policies aimed at extending working lives. In essence, this policy mobilisation has shifted the focus from early retirement and early exit to identifying new routes back into employment, together with encouraging older people to both keep working beyond what was the traditional state retirement age and their expectations of when they would like to retire (Phillipson, Reference Phillipson2013). The trajectories and intricacies of employment in later life are inherently complex, being both the causes and consequences of many other dimensions, such as health, functioning and disability, financial circumstances and family situations (Mabbett, Reference Mabbett2012). Since the mid-1990s, however, employment rates of older men in the UK have increased and this, coupled with higher labour market participation amongst later cohorts of women, means that employment rates of those aged over fifty have increased markedly over the last decade (Powell, Reference Powell2014).
Ageing is an area of increasing public policy concern in the United Kingdom. It is stimulated by recognition of growth in the older population; there are twenty million people aged fifty-plus in the UK (Crawford and Tetlow, Reference Crawford, Tetlow, Banks, Lessof, Nazroo, Rogers, Stafford and Steptoe2010). This number is projected to increase by a further 36 per cent by 2031, when there will be 27.2 million people aged fifty-plus. Only 20 per cent of all workers in the UK come from the fifty-plus group (Phillipson, Reference Phillipson2013) that have opportunities and restrictions afforded by access to labour market in later life (McNair, Reference McNair2006, Leeson, Reference Leeson2011). Increasing life expectancies, the post-war ‘baby-boom’ generation reaching retirement age and declining birth rates mean that the UK, in common with other developed economies, faces the prospect of a rapidly growing aged population, relative to the working-age population, over the next few decades.
The intellectual framework for these changes can be encapsulated in theoretical ideas – related to what has been defined as the ‘risk society’ (Beck, Reference Beck1992) – which have become part of the organising foundation of how we position the ‘personal’ and ‘public’ spaces in which to grow old in the UK and elsewhere. The new global epoch, Beck observed, is characterised by worldwide crises and increased un-sustainability of social institutions such as universal welfare systems. In his earlier work, though still very pertinent today, Beck (Reference Beck1992) claims that modernisation helps the self become an agent of individualisation, which he sees as indicative of neo-liberalism; he advocates that the self becomes less constrained by traditional group identities and institutions but more constrained by the dynamics of markets (pension markets, for example). The self becomes, therefore, a project to be reflexively worked on in the context of a globalised world (Zinn, Reference Zinn and Zinn2008). What we are witnessing is ‘the transference of certain risks through aversion and management which in turn include a reorganisation of power and authority’ (Beck, Reference Beck1992: 4). Fundamental shifts in the reorganisation of welfare, work and pensions have created a situation in which older people have to negotiate a set of risks unknown to previous generations. Following Korpi and Palme (Reference Korpi and Palme1998), it is suggested that Western industrial societies are undergoing a dramatic transformation in which the old and predictable structures of welfare systems are being dismantled and replaced by a series of uncertainties and contingencies.
In modernity, near universal retirement from paid labour linked to the provision of state pensions has been heralded as a significant advance in older people's well-being (Leeson, Reference Leeson2011). It is increasingly clear, however, that as longevity increases, social welfare systems face significant fiscal challenges. In response, many countries, including the UK, have implemented retirement reforms such as abolishing mandatory retirement and raising state pension ages (Phillipson, Reference Phillipson2013).
Risk, work and pensions – a recalibration
The UK has experienced dramatic increases in life expectancy over the last three decades. For example, between 1981 and 2011, male life expectancy at age sixty-five rose by seven years from age seventy-nine to age eighty-six (Powell and Khan, Reference Powell and Khan2013). Although these improvements in life expectancy could be seen as positive and will undoubtedly improve some people's lives, they are also accompanied by potential financial problems for people, employers and for the UK government. This is because improvements in life expectancy have several financial implications: people might be faced with increasingly long retirements that they need to prepare for and fund; employers who sponsor pension schemes may face increases in the length of time they have to pay pensions to their members; and the government also faces increases in the length of time they have to pay state pensions and pension-related benefits to people (Crawford and Tetlow, Reference Crawford, Tetlow, Banks, Lessof, Nazroo, Rogers, Stafford and Steptoe2010). In an attempt to address some of the costs associated with increases in life expectancy, the government has introduced several policies aimed at encouraging people to work for longer.
Extending working lives is not just about learning to live with an older population and how to arrange the provision of work and pensions, it is also about rethinking the nature of the risk society itself. At the same time, there has been a recalibration in society in how ageing has been problematised and this has been open to a huge epistemological and political debate (Foster, Reference Foster2013). The idea of risk in the context of ageing also represents a major paradigm shift in the way that older people are conceptualised as a demographic entity. There can be no doubt that ageing is a global phenomenon; global ageing has a profound effect on economic growth, living standards and the shape of the world order in both rich and poor countries (Phillipson, Reference Phillipson2013). By 2050, about one in five of all living human beings will be sixty five or over (Leeson, Reference Leeson2011: 75). For example, the anxiety associated with such population ageing by both politicians and policy makers has shifted attention from ways to support this “deserving” group to a rectangular re-positioning of older people as a “dependent” group (Biggs and Powell, Reference Biggs and Powell2001).
Hence, the spectre of population ageing necessitates the dismantling of the welfare state and the introduction of a greater degree of reliance on extension of employment and subsequently of older people's working lives. Consequently, the “cradle-to-grave” welfare principles of post-war social planning have been replaced by post-welfare policies that encourage those with resources to make provision for themselves, with the less well-off depending on minimal state support (Phillipson, Reference Phillipson1998, Reference Phillipson2013). This exclusionary device has serious implications. New welfare policies are needed to meet the requirements of the risk society.
Both the growing capability of older people to remain productive within the labour force and the growing number and proportion of older people in the population have raised questions about the way social policies address the needs of this group. At a macro level, this has been explained by global economic forces and bio-medicalisation (Estes, Reference Estes1979). At a micro level, Michel Foucault's (Reference Foucault1977) social theory has enabled gerontological scholars to deconstruct a web of power relations organised around the conceptualisation, or formulation, of ageing issues, and the responses, such as welfare policy measures, to formulated problems associated with adult ageing (Biggs, Reference Biggs1999). Powell and Biggs (Reference Powell and Biggs2000) and Biggs and Powell (Reference Biggs and Powell2001) have pointed out that issues swarming ‘around’ ageing are not just of a medical or economic construction, they have uncovered certain hidden processes in terms of power relations between new forms of governance for older people in relation to welfare and prolongation of occupational identities.
What should be resisted is the tendency to think about ageing just within the institutional framework of the universal welfare state that is subject to neo-liberal reform and subsequent individualisation (Zinn, Reference Zinn and Zinn2008). In other words, an attempt is made to understand the novelty of a new era marked and defined by a new demographic global structure and the corresponding disintegration of welfare institutions, and the consequences of this for the ageing self (Gilleard and Higgs, Reference Gilleard and Higgs2000). The new demographic composition that characterises a global ageing society certainly has important social implications such as extending working lives (Phillipson and Smith, Reference Phillipson and Smith2005; Vickerstaff, Reference Vickerstaff2010; Phillipson, Reference Phillipson2013).
To address this, the next section expands on the idea of population ageing and risk by exploring the ways in which the development of the risk society is related to changes in extending working lives alongside the drive for privatisation of pensions. Finally, we offer suggestions for future lessons in the area of risk, welfare and extension of working lives grounded in ideas from the risk society thesis.
Population ageing and risk
In many Western societies, the institutionalisation of welfare programmes and formation of the medical industrial complex created the foundation for the introduction of the welfare state (Korpi and Palme, Reference Korpi and Palme1998).
By the 1990s, the growing number of people eligible to receive benefits from social welfare increased substantially, raising concerns about the sustainability of pensions due to the shrinking ratio of workers to non-workers in the population (Daly and Scheiwe, Reference Daly and Scheiwe2010). The effects of population ageing ultimately made the role older people play in society a salient political issue. The shrinking younger workforce and increased cutbacks in jobs available to the same workforce in order to maintain job entitlement levels of retirees (and other non-working recipients) – that is, the demographic burden – dominates political discourse. This political discourse is firstly one on gross domestic product (GDP) decline, which follows from a workforce that shrinks faster than labour productivity rises; and secondly one of a lack of innovation and entrepreneurship, which follows from a ‘greying’ workforce. Responses to the crisis – typical for the intermediary period between destruction and re-creation – not only fail to imagine alternative institutions but are also destroying an already weak intergenerational solidarity by creating resentment (de Vroom, Reference de Vroom, Maltby, de Vroom, Mirabile and Overbye2004).
Individualising forms of welfare (in particular pensions) – from extending working lives through to private pensions – adds to this. Subsequently, age and risk has become a more perceptive approach for managing the problems facing older people in a neo-liberal society (Beck, Reference Beck2000). Using risk as an approach to addressing the extending of working lives of older people means focusing on the issues facing older people. Thus, the fears associated with population ageing set the stage for a new ideological framework for managing the risks associated with age and ageing, justified by the logic that it is no longer financially feasible to address the general welfare of older people. The logic of risk is being used as a new basis for distribution of social welfare benefits, such as pensions, within the current global demographic context (Phillipson, Reference Phillipson2013).
The highly developed global societies of late modernity along with the presence of neo-liberal forces foreground the deliberation of risk, security and uncertainty. Indeed, sets of economic policies, the rules of the ‘market’, de-regulation and the shifting sands of public-to-private ownership of historically publicly operated services all serve to illuminate upon what may be conceived as situations and processes whereby the citizen is replaced by economic calculations. Narratives and discourses of risk have a foundational basis in the responsibilities of the state and philosophies of protection. The nature and prevalence of risk-talk across various domains (public and private) signifies its institutionalised character in everyday life. The demand that the failures of modernity require appraisal and future mitigation becomes an all-encompassing dialogue with the production of sentiments that are underlined by problems of trust, anticipation of threats and a reduction in solidarity (Beck, Reference Beck1992).
The next section critically assesses the implications of the extending working lives policies.
Extending working lives
Employment rates have been increasing for people aged fifty and above in the UK. For example, in 1993, around 64 per cent of men aged fifty to sixty-four were in work in the UK, by 2011 this had increased to 70 per cent. The proportion of men working beyond the current male state pension age of age sixty-five has also increased. In 1993, around 8 per cent of men over age sixty-five were in work; by 2011 this had increased to 11 per cent (Mabbett, Reference Mabbett2012). The increase in employment rates at older ages has been even more substantial for women. The state pension age for women was age sixty until 2010, but is now being increased to reach the male state pension age of sixty-five under legislation intended to equalise the male and female state pension age at age sixty-five by 2018. In 1993, around 57 per cent of women aged fifty to fifty-nine in the UK were in work; by 2011 this had increased to around 72 per cent. The proportion of women working beyond the women's state pension age of age sixty has also increased substantially (Vickerstaff, Reference Vickerstaff2010).
Hence, the ageing of Britain's population is one significant influence behind current debates on work and retirement. The First Report of the Pensions Commission (2004) highlighted what it viewed as the dramatic change in the UK's demographic structure which was occurring over the first half of the twenty-first century, with only a negligible increase in the number of twenty to sixty-four year olds, but a 78 per cent increase in the number of those aged sixty-five and over. As a result, the ratio of the sixty-five plus group to those twenty to sixty-four will increase from 27 per cent currently to 48 per cent by 2050, with most of this increase concentrated in the next thirty years (Powell and Khan, Reference Powell and Khan2013). In this context, a rise in average retirement ages would need to be a significant element in the policy response to demographic change.
The proportion of older people in the working age population has been steadily increasing over the past decade. The working age population (defined as sixteen to sixty-five) stands at 35 million people, of whom 8.8 million (25 per cent) were aged fifty to sixty-five (Phillipson and Smith, Reference Phillipson and Smith2005). Population projections suggest that in 2021 32 per cent of the working age population will be aged fifty and over (taking into account the increase in the retirement age for women to sixty-five between 2010 and 2020), with a slight fall to around 30 per cent by 2031 (Phillipson and Smith, Reference Phillipson and Smith2005). Gruber and Wise (Reference Gruber and Wise2007: 13) suggest that ‘one consequence of these changes will be that the experiences and outcomes of older workers will have a growing influence on the performance of the labour force as a whole’. Phillipson (Reference Phillipson2013) suggests that an important policy issue stemming from this development will be the need to create more sustainable working lives, with the provision of improved support and assistance to older people within the workplace.
Encouraging older people to remain at work is closely linked with concerns about pensions and financial support to older people. The Green Paper Simplicity, Security, and Choice: Working and Saving for Retirement (DWP, 2002) identified a number of policies aimed at people in their fifties to assist expanding opportunities and choice for individuals to work and save longer. The Pensions Act 2004 introduced reforms aimed at extending working life and giving individuals more generous and flexible options for how and when to retire. Over the past decade, changes to occupational pension rules mean that individuals will be able to carry on working for the same employer while drawing an occupational pension. In addition, the age from which a non-state pension can be taken increased from fifty to fifty-five in 2010 (Vickerstaff, Reference Vickerstaff2010). These, along with other developments such as more generous state pension deferral options, provide the basis for incentives for people to remain in work up to and beyond retirement age.
Vickerstaff (Reference Vickerstaff2010) suggests that for many people, leaving the labour market can result in poverty, insecurity and social exclusion. Crawford and Tetlow (Reference Crawford, Tetlow, Banks, Lessof, Nazroo, Rogers, Stafford and Steptoe2010) have pointed to the disadvantages associated with abrupt departures from work, arguing instead for greater flexibility in the transition from work to retirement. The idea of flexibility is being promoted in different ways in many areas of social policy, with moves to extend rights to flexible working for workers undertaking care within domestic settings – an important issue for people in their fifties and early sixties where around one in four adults will have some caring responsibilities (Phillipson, Reference Phillipson2013).
The most important risky issue for the extension of working lives is the focus on private pensions and their impact. The British Conservative government's pre-occupation under austerity (as of 2016) to drive private pension provision deeper into the policy fabric lacks critical analysis. British pension policy rarely gazes upwards to look at ‘the powerful’ (Walker and Aspalter, Reference Walker and Aspalter2008), who, in the case of older people, are the de-regulated and democratically un-accountable financial organisations (Powell, Reference Powell2014). The lack of any critical analysis of the role and practices of financial and corporate institutions constitutes a major policy weakness in government regulation, impinging on the safeguarding of older people's finances in the extension of their working lives. This provides a clear illustration of the dislocation within government concerning pension policy in general for older people.
Despite the ‘Beveridgean dream’ of pensions being universal to the populace in UK, neo-liberal policies on pensions have ideologically almost always started from a position of laissez-faire. It can be seen that neo-liberal social policy focuses on private provision, which exemplifies a minimalist approach from the state. Private pension provision became a key building block of policy toward the ageing population in the UK. The philosophy behind this is clear. For the past twenty years, there has been a steady erosion in the value of the state pension relative to earnings (Phillipson, Reference Phillipson2013).
The state's rationale is that it should provide just the minimum of security; private pension provision should expand to fill the void left by the retreat of the state. For example, under the Social Security Act (1986), a concerted effort was put into promoting private pensions – in particular, tax incentives and national insurance rebates encouraged people to opt out of the State Earnings Related Pension Scheme (SERPS) and to increase their personal pension savings (Gilleard and Higgs, Reference Gilleard and Higgs2000). Subsequently, however, successive governments came to feel that this represented too large a commitment to state pensions: the Conservative government arranged for SERPS to be phased out gradually and sought instead to encourage more private and occupational pension provision. The major problem was that the Office of Fair Trading (1997) suggested in the 1990s that personal pensions were of poor value and that 1.5 million policies were wrongly sold to customers (Phillipson, Reference Phillipson2013). The precariousness of non-state provision is illuminated by the decline in occupational pension schemes. Membership of such schemes has declined from 10.1 million in 2000 to 8.3 million in 2010 (Mabbett, Reference Mabbett2012). Some commentators (Powell, Reference Powell2014) have also argued that the development of occupational pension schemes might have peaked, particularly given the decline in jobs where the tradition of such schemes is strong, such as parts of the public sector. But as the patterns of employment change, with a growth in short-term contracts, the capacity to build up pension rights has been affected – an unintended consequence of extending working lives. Similarly, the political rationale is that this decline in occupational pension schemes is offset by the growth of personal pension schemes (Mabbett, Reference Mabbett2012). To this day, the final incomes of many pensioners rely increasingly on individual and independent provision, rather than primarily the state pension (Phillipson, Reference Phillipson2013).
Conclusion: ageing, welfare and risk – lessons for critical understanding
To ensure that the public and private pension systems are able to continue supporting people through retirement, the UK government has introduced several policies aimed at extending working lives. There are three strands to the government's extending working lives policy agenda. The first strand is welfare-based and involves attempts to move people of all working ages (both under and over fifty) off state benefits and into paid work through tougher benefit eligibility tests and intensive, targeted support for job-seekers who are vulnerable. The second strand involves raising the ages at which people can claim their state pension and age-related means-tested benefits. The third strand involves attempting to remove barriers to working longer by removing compulsory retirement and tackling age discrimination.
Although all of these policies will encourage and enable some people to work longer and to take their state and private pension later, which could increase their income in retirement, there may be negative financial implications for those who cannot work longer because of health problems or other factors. For those who are unable to work longer, rises in the state pension age and changes to the benefit system may result in lower incomes in retirement – with individuals managing their own risk through self-governance of pensions.
Further, extending working lives and raising the employment rate of older workers are key responses to the demographic and welfare (pension) challenges of an ageing workforce. Our discussion has raised concerns about ageing and risk, and their relation to one feature of social welfarism: extending working lives, and the use of risk as a mechanism by which to attend to the private pensions of older people in an era of neo-liberalism. There are some important lessons to reflect on.
Firstly, due to improvements in life expectancy, an increasing proportion of the population are now in retirement. This has put increasing and unsustainable pressure on state, occupational and private pension schemes (Mabbett, Reference Mabbett2012). Retiring later in life appears to be an obvious solution. However, there is a lack of information on the factors that encourage people to, or discourage people from, retiring later, and the health and wealth implications of such decisions. It is likely that both the decision making and outcomes vary according to the socioeconomic status of the individual (Taylor, Reference Taylor2002; Phillipson and Smith, Reference Phillipson and Smith2005). Therefore, encouraging people to retire later in life may impact on both health and wealth inequalities (Tillsley et al., Reference Tillsley, Taylor, Beausoleili and Wilson2000). Understanding these issues is essential to informing the future actions of policy makers and employers in the extension of working lives.
Secondly, it is perhaps emblematic that a policy based ostensibly on the premises of leaving-be caused problems for private pension provision for older people as an outcome of extending working lives. To understand this, it is important to examine trends tacit in the debate on private pensions and ageing that is central to wider public policy. Indeed, wider economic priorities, to ‘roll back the state’ and thereby release resources for individualism and free enterprise, had become translated into a financial discourse about personal obligations and the need to enforce them. If older people did not have sufficient national insurance savings, then the state would have to pick up the bill. In summation, state discourses on private pensions provided less help for older people through austerity.
Ageing, then, is itself becoming a more social, reflexive and managed process, notably in the relationships between the individual, the state and policies focused on extending employment; this involves the ‘political domain’. The emergence of a risk society in the UK has been successful because it has identified existential concepts such as self-responsibility, self-governance and self-care that are said to facilitate the extension of working lives (Phillipson, Reference Phillipson2013). The regulation of personal conduct has shifted from being presented as a responsibility of the state to the responsibility of micro-level social actors such as ’older people’ as ‘consumers’ (Biggs and Powell, Reference Biggs and Powell2001). The implications are profound for lines of social exclusion. Neo-liberalism attempts to define the social policy domain to interpret valid human needs. By extending working lives, the state attempts to re-position its work and welfare subjects based upon minimal intervention and regulation via a more intensive rolling program of privatisation, deregulation, and contraction of private pensions (Phillipson, Reference Phillipson2013).
