Pensions (Hansard, 2 July 1980)

§ Mr. Prentice

On the assumption that the pattern of retirement amongst men in the five years following the reduction of pension age for men to 60 would be the same as the present pattern amongst men aged 65 to 70 and that two-thirds⁽¹⁾ of the jobs vacated by men in employment retiring earlier were filled by persons on the unemployment register, the net cost to central government funds in 1980–81, at average rates for the year, would be in the order of £1,600 million.

However, in a situation of full employment, when there would be no significant job replacement by persons on the unemployment register, these costs would rise considerably. To give some indication of this, if the effect of job replacement on the above calculation were disregarded, the cost in 1980–81 would be of the order of £3,300 million.

These figures take account of the net cost to the National Insurance Fund, the loss of National Insurance surcharge, National Health Service, Redundancy Fund and Maternity Pay Funds income, a broad estimate of the loss of income tax revenue and a saving in supplementary benefits. There would, in addition, be important implications for occupational pension schemes. (1)The figure of two-thirds has been assumed because not all retirements would create vacancies, and because some vacancies would not be filled, since there would be insufficient unemployed with the necessary qualifications in the right localities.