Latest news with #state pension age
Telegraph
2 days ago
- Business
- Telegraph
Labour will learn it can't balance the books on the backs of pensioners
Here we go again. Another review of state pension age (SPA), heralding further increases in the starting age for the National Insurance (NI) pension safety net. Our state pension – one of the lowest in the developed world – is the social insurance retirement 'safety net', designed as a minimum amount that people too old to work will live on in retirement for the rest of their lives. The deal has always been that those paying into the insurance system all their lives will be supported when they need to stop working in the future. Over the years, however, successive reforms have meant the system no longer seems to reflect those original social aims. Regardless of how long you have paid in, and whether or not you can genuinely keep working because of ill-health or caring duties, the Government expects you to just keep working longer before starting your state pension. Currently 66, by 2028, SPA will be 67. Further increases to 68 are already planned. There are widespread worries that the demographic pressures of many more over-60s and fewer younger people will place unsupportable pressures on the public purse. This leads policymakers to conclude that rising the average life expectancy justifies expecting everyone to longer. But this ignores important elements of modern Britain. Not everyone can manage to keep waiting longer for basic retirement support. Of course, people with other pensions, (including officials and politicians who make the policy decisions) will have money to tide them over for years until their state pension starts. But what about those who are not so fortunate? Many will be plunged into penury, trying to manage on meagre out-of-work benefits, despite having decades-long NI contribution records. I believe average life expectancy is not an appropriate indicator of whether or not everyone can keep working longer. By definition, half the population will be below the average. Their circumstances shouldn't be ignored. This new review's remit covers fairness between generations and state pension sustainability. So it must consider more factors than just starting age. It should include proper recognition of the enormous twenty-year differential in healthy life expectancy across the country. The worst-off groups are already in poor health before their sixties, but the best-off stay fit and healthy into their early-seventies. Since the pandemic and subsequent NHS dislocations, many older workers' health has worsened, making it vital to consider fairness within generations, not just worrying about younger versus older people. Studies have shown that increasing SPA to 66 resulted in a significant rise in poverty among 65-year-olds. The least healthy are also less likely to have other income. Future pensioners are also facing lower pensions as traditional employer-guaranteed income is replaced, for private sector workers, by pension funds that are dependent on investment success and potentially vulnerable to tax raids. Of course, continually jacking up SPA is a marvellous money-saving mechanism for any government. It's the easiest policy lever to pull to save money on pensioner support. However, there are other ways to cut state pension costs. Currently, just 35 years of NI qualifies for a full state pension. This is nowhere near a full working life. People with health or caring issues, and a 50-year NI record, still cannot receive a penny of state pension before age 66. Just forcing people to keep working longer, for less pension, is not sustainable. Ill-health early payments should be considered for people in poorer health, including heavy manual labour workers, with no private pension and decades-long NI records. Providing early access to pension credit, or early retirement payments for carers and those in poorest health, would still save money, while also recognising those at the bottom of the health and wealth distribution in their sixties, who have so far been abandoned.
Daily Mail
2 days ago
- Business
- Daily Mail
Could the state pension age really rise to 74?
A new review of the state pension age has triggered speculation that it may have to rise substantially to contain rapidly rising costs. The state pension age is going to rise from 66 to 67 within the next couple of years, and the next increase after that is now officially up for debate. The Government is required by law to review the state pension age every six years, so it has ordered two reports which will look at when to hike to 68. But a recent report by independent think tank, the Institute for Fiscal Studies, warned that without reform of the state pension triple lock , the retirement age would have to rise to 74 by 2069. Could this really happen? We explain what you need to know about the state pension age and why it could increase. What is happening to the state pension age? The studies, one by the government's actuary and the other by an independent expert, are expected to consider the link between when you can draw the state pension and life expectancy, intergenerational fairness, and the bill borne by taxpayers. The state pension is currently almost £12,000 a year if you have paid enough qualifying national insurance years to receive the full amount. The qualifying age will rise to 67 between 2026 and 2028. The next rise to 68 is technically not scheduled until the mid 2040s, which will affect those born from 6 April 1977. The last two reports in 2017 and 2023 recommended speeding up the increase to 68, but the Conservative government ignored them, and current Labour leaders could do the same. Will the state pension age have to rise faster? The Government has effectively, if not in so many words, told the experts working on the next two reports to operate under the assumption that the triple lock pledge will remain in place indefinitely. This means that the state pension increases every year by the highest of inflation , average earnings growth or 2.5 per cent. The Government has promised to stick to the triple lock for the whole of this parliament. Pension experts are weighing in on the chances of a state pension age rise to 68 in the near future, and the trade-offs with the triple lock in terms of the cost to taxpayers. A recent report by the Institute for Fiscal Studies pointed to government modelling on how to limit public spending on the state pension to below 6 per cent of national income. To achieve this AND retain the triple lock state pension guarantee, it worked out the state pension age would have to rise to 69 by 2048–49, and then jump to 74 by 2068–69 - which would be bad news for people in their 30s and younger now. Nerves were also rattled lately when Denmark's government moved to hike its retirement age to 70 by 2040. Meanwhile, it is worth noting that the minimum pension age for accessing workplace and other private retirement savings is due to rise from 55 to 57 from April 2028. Governments have in the past tended to keep the state pension and private pension ages roughly 10 years apart, so any future increases could well continue to happen in tandem. This combined with a faster rise in the state pension age could cause a serious headache for those hoping to retire earlier. Triple lock is 'elephant in the room' 'The third state pension age review will be watched like a hawk by swathes of middle-aged workers,' says Jason Hollands, managing director of Evelyn Partners. 'The triple lock is not within the remit of the Commission, but it is in some respects another elephant in the room, as while it remains it seems inevitable that state pension ages must be raised. 'That's not so much a problem for wealthier savers who can fund a few years of retirement wholly from private income. 'It's more of one for less well-off workers who might have to work until and even beyond state pension age, and then also might not have as many years of life expectancy to draw on the state pension.. 'Would a lower state pension at an earlier age be fairer than a higher one at a later age? It's a question worth asking.' State pension costs are set to spiral 'There is an increase to age 68 pencilled in for 2046, but a faster increase is definitely on the cards,' says Rachel Vahey, head of public policy at AJ Bell. 'The first two reviews of the state pension age advocated bringing this forward, but successive governments have treated the issue like a hot potato. 'This latest state pension age review, however, may eventually force the government's hand. 'State pension benefits are one of the single biggest expenses for the Treasury and account for more than 80 per cent of the £175billion pensioner welfare bill. 'Without policy intervention, state pension costs are set to spiral to nearly 8 per cent of GDP over the next 50 years based on the current trajectory, up from 5.2 per cent today. 'The second state pension age review in 2023 recommended that the increase to 68 should be introduced between 2041 and 2043 to help reduce costs, although the government under Rishi Sunak opted not to commit to that timetable. 'However, the new Labour government may feel it needs to consider the rise to age 68 more closely, particularly if it wants to demonstrate steps toward long-term fiscal prudence.' Triple lock vs state pension age - a hard choice 'The Government instructs the reviewers to assume "current policies regarding the entitlement and value of the state pension remain unchanged over the long term",' says Steven Cameron, pensions director at Aegon. 'The future value of the state pension is currently set by the triple lock. The Government has not committed to retaining the triple lock beyond this Parliament but has instructed the review to assume it continues indefinitely. 'While some may take comfort in this, it could be false comfort. The purpose of the review is to look at the age the state pension starts from and the role this plays in managing the long-term sustainability of the state pension. 'As other reports have shown, the triple lock puts the long-term sustainability of the state pension under huge pressure. So the conclusions from the review may be that if the triple lock continues, state pension age will have to go up further and faster than if it didn't continue.' 'For those already receiving their state pension, any threat to the triple lock will be bad news. 'But for those who haven't yet reached state pension age, the consequence of an ongoing triple lock could be having to wait extra years before receiving their state pension. 'That's a hard choice, but it's one we need to face up to as a nation. Undertaking this independent review will allow the Government to set out these choices to the voting public.'
Daily Mail
3 days ago
- Business
- Daily Mail
Could the state pension age really rise to 74? Why the 'triple lock' may mean a longer wait for younger workers
A new review of the state pension age has triggered speculation that it may have to rise substantially to contain rapidly rising costs. The state pension age is going to rise from 66 to 67 within the next couple of years, and the next increase after that is now officially up for debate. The Government is required by law to review the state pension age every six years, so it has ordered two reports which will look at when to hike to 68. But a recent report by independent think tank, the Institute for Fiscal Studies, warned that without reform of the state pension triple lock, the retirement age would have to rise to 74 by 2069. Could this really happen? We explain what you need to know about the state pension age and why it could increase. What is happening to the state pension age? The studies, one by the government's actuary and the other by an independent expert, are expected to consider the link between when you can draw the state pension and life expectancy, intergenerational fairness, and the bill borne by taxpayers. The state pension is currently almost £12,000 a year if you have paid enough qualifying national insurance years to receive the full amount. The qualifying age will rise to 67 between 2026 and 2028. The next rise to 68 is technically not scheduled until the mid 2040s, which will affect those born from 6 April 1977. The last two reports in 2017 and 2023 recommended speeding up the increase to 68, but the Conservative government ignored them, and current Labour leaders could do the same. > How much does a comfortable retirement cost? What YOU will need Will the state pension age have to rise faster? The Government has effectively, if not in so many words, told the experts working on the next two reports to operate under the assumption that the triple lock pledge will remain in place indefinitely. This means that the state pension increases every year by the highest of inflation, average earnings growth or 2.5 per cent. The Government has promised to stick to the triple lock for the whole of this parliament. Pension experts are weighing in on the chances of a state pension age rise to 68 in the near future, and the trade-offs with the triple lock in terms of the cost to taxpayers. A recent report by the Institute for Fiscal Studies pointed to government modelling on how to limit public spending on the state pension to below 6 per cent of national income. To achieve this AND retain the triple lock state pension guarantee, it worked out the state pension age would have to rise to 69 by 2048–49, and then jump to 74 by 2068–69 - which would be bad news for people in their 30s and younger now. Nerves were also rattled lately when Denmark's government moved to hike its retirement age to 70 by 2040. Meanwhile, it is worth noting that the minimum pension age for accessing workplace and other private retirement savings is due to rise from 55 to 57 from April 2028. Governments have in the past tended to keep the state pension and private pension ages roughly 10 years apart, so any future increases could well continue to happen in tandem. This combined with a faster rise in the state pension age could cause a serious headache for those hoping to retire earlier. > In your 30s or younger? How to plan ahead for a higher state pension age Triple lock is 'elephant in the room' 'The third state pension age review will be watched like a hawk by swathes of middle-aged workers,' says Jason Hollands, managing director of Evelyn Partners. 'The triple lock is not within the remit of the Commission, but it is in some respects another elephant in the room, as while it remains it seems inevitable that state pension ages must be raised. 'That's not so much a problem for wealthier savers who can fund a few years of retirement wholly from private income. 'It's more of one for less well-off workers who might have to work until and even beyond state pension age, and then also might not have as many years of life expectancy to draw on the state pension.. 'Would a lower state pension at an earlier age be fairer than a higher one at a later age? It's a question worth asking.' State pension costs are set to spiral 'There is an increase to age 68 pencilled in for 2046, but a faster increase is definitely on the cards,' says Rachel Vahey, head of public policy at AJ Bell. 'The first two reviews of the state pension age advocated bringing this forward, but successive governments have treated the issue like a hot potato. 'This latest state pension age review, however, may eventually force the government's hand. 'State pension benefits are one of the single biggest expenses for the Treasury and account for more than 80 per cent of the £175billion pensioner welfare bill. 'Without policy intervention, state pension costs are set to spiral to nearly 8 per cent of GDP over the next 50 years based on the current trajectory, up from 5.2 per cent today. 'The second state pension age review in 2023 recommended that the increase to 68 should be introduced between 2041 and 2043 to help reduce costs, although the government under Rishi Sunak opted not to commit to that timetable. 'However, the new Labour government may feel it needs to consider the rise to age 68 more closely, particularly if it wants to demonstrate steps toward long-term fiscal prudence.' Triple lock vs state pension age - a hard choice 'The Government instructs the reviewers to assume "current policies regarding the entitlement and value of the state pension remain unchanged over the long term",' says Steven Cameron, pensions director at Aegon. 'The future value of the state pension is currently set by the triple lock. The Government has not committed to retaining the triple lock beyond this Parliament but has instructed the review to assume it continues indefinitely. 'While some may take comfort in this, it could be false comfort. The purpose of the review is to look at the age the state pension starts from and the role this plays in managing the long-term sustainability of the state pension. 'As other reports have shown, the triple lock puts the long-term sustainability of the state pension under huge pressure. So the conclusions from the review may be that if the triple lock continues, state pension age will have to go up further and faster than if it didn't continue.' 'For those already receiving their state pension, any threat to the triple lock will be bad news. 'But for those who haven't yet reached state pension age, the consequence of an ongoing triple lock could be having to wait extra years before receiving their state pension. 'That's a hard choice, but it's one we need to face up to as a nation. Undertaking this independent review will allow the Government to set out these choices to the voting public.'
Reuters
4 days ago
- Business
- Reuters
UK launches review into raising state pension age
LONDON, July 21 (Reuters) - Britain on Monday said it would launch a review into raising the state pension age - a key factor for the public finances - at the same time as a fresh look at contributions by workers towards their retirement. "Alongside reviving the Pensions Commission, I am also announcing the launch of the next statutory Government Review of State Pension age," Work and Pensions Secretary Liz Kendall said in a statement. The current state pension age is 66. The previous government said in 2023 that an increase in the state pension age to 67 would be phased in between 2026 and 2028 and that a further review on raising the age to 68 would take place within two years after the next election which was held in 2024. Under 2014 legislation, Britain's government must undertake a review every six years that considers demographic and economic factors affecting retirement age.
Yahoo
4 days ago
- Business
- Yahoo
Government to conduct early review into state pension age
The work and pensions secretary has announced a review of the state pension age. The government is required to conduct a review into the state pension age - currently 66 - every six years, but it appears to be starting this one earlier as the last one concluded in review will consider whether the current state pension age is still appropriate, based on factors such as life expectancy. The announcement comes following warnings from experts that people looking to retire in 2050 are on course to receive £800 per year less than current pensioners. The Department for Work and Pensions (DWP) said 45% of working-age adults were putting nothing into their pensions, with concerns that the cost of living crisis is preventing people from investing in their retirement. Liz Kendall she was "under no illusions" about how difficult it would be to map out plans for pensions for the coming decades, as the cost of living crisis continues to bite. She said "many workers are more concerned about putting food on the table and keeping a roof over their heads than saving for a retirement that seems a long, long way away", and that many businesses "face huge challenges in keeping profitable and flexible in an increasingly uncertain world". Giving a speech in west London, the work and pensions secretary also announced that she would revive the Pension Commission to consider why future pensioners are on track to be poorer than pensioners now. "Just because pensioner poverty has fallen does not mean all the problems have gone away," she said. "Far from it. Women who are now approaching retirement have half the private pension wealth of men, so the average woman in her late 50s can expect a private pension income of just over £100 a week, compared to £200 a week for men. "Only one in five of the self-employed are saving into a private pension, down from half in the late 1990s, meaning over 3 million self-employed people aren't saving anything at all for their retirement." The commission, which was first launched in 2002 under Sir Tony Blair's government, will look at such challenges and consider policy ideas such as lowering the age and earnings threshold at which people are brought into auto enrolment. Read more: Ms Kendall argued that young people in particular were struggling to invest in their retirement because of housing costs. She said young people " haven't got a hope in hell of getting on the housing ladder" and were being "killed by rent" - which she said was driving a "tsunami of pensioner poverty". "Put simply, unless we act, tomorrow's pensioners will be poorer than today's, because people who are saving aren't saving enough for their retirement," she said. "And crucially, because almost half of the working age population isn't saving anything for their retirement at all." The commission is expected to provide recommendations for how to boost retirement income in 2027.
