§ Sir David Price
asked the Secretary of State for Social Services what it would cost in a full year to reduce the starting age for eligibility for the retirement pension for men to 64 years, 63 years, 62 years, 61 years and 60 years, respectively, using the uprated scales of benefit applicable in November.
§ Mr. Prentice
On the assumption that the pattern of retirement amongst men in the five years following the new pension ages would be the same as the present pattern among men aged 65 to 70, and that two-thirds* 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 for a full year, at November 1980 rates, would be of the order of:
Reduction of age to Cost £ million 64 300 63 600 62 900 61 1,300 60 1,800
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 calculations were disregarded, the costs, on the same basis as those above, would be of the order of:
Reduction of age to Cost £ million 64 600 63 1,200 62 1,900 61 2,600 60 3,600
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 210W 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.
* 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.