State Pension Age Review Ignores Vulnerable Groups

Strategic Insights -

Widespread concerns are growing about the impact of increasing state pension age on vulnerable groups in the UK. The National Insurance (NI) pension safety net, designed as a minimum amount to support people in retirement, has been eroded through successive reforms. The government expects individuals to work longer, despite health and caring issues, with further increases planned to 68. This ignores the reality of modern Britain, where many cannot afford to delay retirement, and those with other pensions will have financial cushions. Average life expectancy is not an accurate indicator of ability to work longer, with half the population below the average.

Key Takeaways:

  • The state pension age review's remit should consider fairness between generations, including proper recognition of the 20-year differential in healthy life expectancy across the country.
  • Increasing state pension age to 66 resulted in a significant rise in poverty among 65-year-olds, particularly among the least healthy.
  • Future pensioners face lower pensions due to the replacement of traditional employer-guaranteed income with pension funds dependent on investment success and potentially vulnerable to tax raids.
  • People with health or caring issues, and a 50-year NI record, cannot receive a penny of state pension before age 66, despite fully qualifying.
  • Ill-health early payments, providing early access to pension credit, or early retirement payments for carers and those in poorest health, could save money while recognizing vulnerable groups.
  • Ros Altmann argues that continually increasing state pension age is a "marvellous money-saving mechanism" but neglects the impact on vulnerable groups.
  • The poverty gap among pensioners is a pressing issue, with many facing financial strain due to inadequate state pension support.

Statistics:

  • 66 is the current state pension age, set to rise to 67 by 2028 and 68 as planned.
  • 20 years: the differential in healthy life expectancy across the country.
  • 35 years: the number of years NI contribution required for a full state pension.
  • 66: the age at which people with health or caring issues, and a 50-year NI record, cannot receive a penny of state pension.

Sources:

  • Altmann, R. (2023). State pension age will have to rise faster. The Telegraph.
  • Independent SAGE (2022). The Impact of State Pension Age Increases on Health and Wellbeing.