Future rises to the state pension age – what does the independent interim report say?

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An interim report into future rises to the state pension age says that people could be given early access to their state pension and that there may be more than one state pension age.

Q. What’s the review about?

A. When the government speeded up the rise in state pension age to 66, it also said that in future the state pension age would be reviewed regularly, to make sure it ‘kept up’ with rises in longevity. It isn’t designed to change the current timetable for increases in the state pension age to 67 by 2028, but will look at whether the state pension age should rise faster (or, indeed, slower) after 2028.

In the spring, when she was Pensions Minister, Ros Altmann said that John Cridland, former Director-General of the CBI, would lead the independent review (you can read about this in my article).

The review is due to publish its final report by early May 2017.

Q. What’s happened today?

A. John Cridland has published an interim report and outlined the issues and asked for feedback on particular proposals. It’s a chunky report, running to 100 pages. I’ve highlighted a few things that leapt out at me, which you may be interested in or want to give feedback to.

SAVVY TIP: If you want to give feedback, you must do this by 5pm on December 31st. You can give feedback by email: spa.review@dwp.gsi.gov.uk

Key content of the interim report

This is a list of things that struck me on first reading of this report.

1. Past rises in state pension age

One quote about past rises in state pension age leapt out at me. This is it: “It must however also be recognised that it has one of the smoothest rises in pension age and that many countries may well raise their pension ages with less notice between now and 2060 to join the UK at 68 or go further.”

MY VIEW: I’m disappointed that his review describes the rises in state pension age so far as ‘one of the smoothest’ of the OECD countries. I don’t think that’s how millions of women who’ve seen their state pension age rise, not once, but twice, will see it.

2. The number of women aged 65+ currently in work

The report says: “There are currently 1.2 million people – 742,000 men and 465,000 women – aged 65+ who are in employment: 14.2% and 7.5% of male and female 65+ population.”

MY VIEW: This is a very low percentage. Perhaps this is not surprising as the state pension age for women is currently below 65. However, feedback I get from a number of SavvyWoman users is that even if they wanted to continue working, they’re unable to – either because they cannot do this (physically or mentally) or because the jobs are not available. We have had a number of initiatives over the last decade or so designed to increase the number of older workers in the workforce and so far they’ve only had modest success.

3. The gap in life expectancy between those living in deprived areas and those in well-off areas

We’re often being told (by the government, among others) that we’re all living longer. While it’s true that average life expectancy is increasing, there are two issues. Firstly, it doesn’t seem to be increasing at the same rate now as it was in 2010 (research shows that in 2012 and 2014, life expectancy was increasing at a slower rate). Secondly, the gap between those who have shorter life expectancy and those who have the longest is increasing. This is not new. I highlighted this in a submission to the Pensions Bill Committee in 2013.

More recently, the Pensions Policy Institute warned that future rises in the state pension age could be happening too quickly (you can read my write up of this here).

Today’s report quotes figures showing that a woman aged 65 living in the most deprived areas can expect less than six years in good health. It says: “At age 65, women in the most deprived areas can currently only expect 5.7 years of good health, compared to 12.8 years in least deprived.”

MY VIEW: Any rise in the state pension age must take account of the fact that the gap in life expectancy is widening. It doesn’t seem fair that those who are relatively well off can enjoy more than double the years in healthy retirement as someone who lives in a deprived area. Any future rises in the state pension age should aim to improve, not worsen this situation.

4. Women retire on less than men

Historically, women have had less than men to live on when they retire. The report says: “Taking a broad look across all current working age groups, men are projected to have around a 25% higher income on average than women in their first year of retirement. This equates to a difference of approximately £3,000 per annum. Although the gender gap in pension income is set to narrow for Generation X, it in fact widens again for Generation Y.” So, women born in the 1980s and later are likely to find the gap between their pension income and that of men is wider than that of women born in the mid 60s and 70s.

MY VIEW: Any increase in state pension age must take account of the fact that the state pension generally makes up a bigger percentage of a woman’s retirement income than a man’s.

5. Communication

If the government is going to increase our state pension age, it must tell us clearly and make sure we’re getting the message (e.g. not just have a whizzy digital tool that can’t reach those who aren’t online).

MY VIEW: I believe that the fact that women weren’t told about the rise in the state pension age to 65 and how it would affect them individually has been one of the biggest failures in government social policy for decades.

Useful links:

If you’d like to read the full interim state pension age report, you can do this by going to the Gov.uk website.

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