I’m always wary of using press articles as the basis for any post or presentation, as so often the quotation or facts have been selectively edited to create a good story. So it is with some care that I wade (or at least dip a toe) into the debate around State Pensions sparked by the TUC last month.

So let’s start with the article in question, from The Telegraph on the 30th August. The article can be viewed via the following link: http://goo.gl/t1afCJ

Much of the article is self-evident. As we covered on this blog before the summer break, and as most people recognise anyway, there are markedly different life expectancies between different areas of England. And of course, if you live longer you will receive state pensions for that much longer also. The article suggests that the difference in payments made is sizable. A female living in East Dorset (the area with the highest life expectancy) may receive some £67,000 more in state pensions than those in the area with the shortest life expectancy, and likewise males in East Dorset may receive £53,000 extra also.

So far so good, but it’s the quotes attached towards the end of the article which surprised me not a little. Frances O’Grady, TUC general secretary is reported as saying the following:

“There is already a shocking divide in life expectancies across Britain, and if current trends continue that inequality will get worse in the coming decades. The government’s pension reforms will add to the problem, with people in richer areas receiving more from the state, while those in poorer areas receive less.

Ms O’Grady added: “It cannot be right that people living in a wealthy area can receive tens of thousands of pounds more in state pension than someone living in a less well off part of the country, particularly as richer people are likely to have earned more during the career and have a bigger private pension too.”

As mentioned above, it is undeniable that those that live longer will receive more state pension over their lifetime. The underlying basis of all pensions schemes in the UK is to provide an income for life, so this is to be expected. But to suggest that those that live longer are financially better-off as a result of their longevity and state pension payments might be slightly misleading.

The state pension is an important underpin to many pensioners own retirement savings (often sourced through a generous company supported scheme), and for those that have not benefitted from company pension support, the state offering may be the only source of income in the pensioner’s retirement years. The state pension received will (generally) be spent on the everyday costs of existence. If you live longer, you will have to pay these costs for longer also. So although the pensioner has received several extra years of state pension income, they have also had to pay for their costs of survival over the same period also. It’s therefore probable that they are no financially better-off than an individual who dies earlier.

Which takes me to the part of the above quote with which I take issue:

“It cannot be right that people living in a wealthy area can receive tens of thousands of pounds more in state pension than someone living in a less well off part of the country.”

Why not? It does not follow that a pensioner who lives in a location which, on average, is more affluent is personally wealthy also. There are cases of hardship in every location in the country: there will just be statistically fewer in these wealthier areas. To suggest that someone who lives in East Dorset should perhaps have less state pension than someone in, say, Manchester just on the grounds of their location alone would seem rather unfair. It’s perhaps surprising that such a comment should arise from the TUC, given that the Union movement’s primary historic role is to champion the underrepresented and vulnerable.

The Telegraph article presented the TUC comments as another element of the famed North/ South divide. But it would be wrong to assume that all poverty, and Union membership, arises from the poorer parts of the UK alone. After all, one of the most famous and historic moments in Union history was centred on the oppressed farm workers in the small village of Tolpuddle. Which, coincidentally, is in the fair county of (yes you’ve guessed it) Dorset.

Best regards

Steve