State pension age could be decided by your postcode – ‘absolute nightmare!’

State pension rise is 'woefully insufficient' says expert

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For many people, the state pension is a key source of income for their later years. Understanding when one will get it is therefore key.

The current state pension age is gradually increasing for men and women, and will reach 67 by 2028.

However, there is currently a review being undertaken as to the speed at which rises to 68 should be implemented.

For a long time, many have speculated about whether there will be changes to how the state pension age is applied.

Some have even made suggestions about the way the Government should go about this.

One such suggestion involves setting the state pension age based on a person’s postcode.

This, supporters of the idea argue, would reflect the fact life expectancy in different parts of the country vary significantly. 

For example, in London, the Office for National Statistics (ONS) states life expectancy measured in 2018 – 2020 was 80.3 years.

However, in Scotland, measured in the same period, life expectancy was only charted at 76.8 years.

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It has been argued implementing the state pension age according to postcodes would make the system “fairer”.

Tom Selby, head of retirement policy at AJ Bell, said: “Any policy decision on the state pension needs to balance fairness against complexity. 

“The more you try to make the state pension system fair, the more difficult it becomes for ordinary people to understand and navigate.”

However, the expert acknowledged an implementation of postcode pensions could create insurmountable challenges.

He continued: “State pensions based on postcodes would be a nightmare to implement, cause horrendous complexity and possibly perverse actions, and would inevitably be hugely costly to administer.

“We would strongly urge the Government to err on the side of simplicity.

“Automatic enrolment is enabling millions of people to get into the saving habit for the first time. As engagement with these pensions builds, it is vital people know what they are likely to get from the state and when.

“Simplicity, certainty and good communication are all absolutely essential in building and maintaining trust in pensions.”

The current review is considering whether rules around pensionable age are appropriate.

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It will look at the latest life expectancy data, alongside other evidence such as differences across countries and regions.

In accordance with the law, the findings must be published by May 7, 2023.

A DWP spokesperson told “The state pension provides the foundation for retirement planning and financial security in older age.

“The Government is required by law to regularly review the state pension age and has launched the second state pension age review. 

“This will consider whether the rules around state pension age are appropriate, based on a wide range of evidence including latest life expectancy data and two independent reports. 

“It is too early to speculate on the outcome of this Review.”

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