Budget 2021: Experts outline state pension changes
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The UK Government has implemented a timetable for increasing the state pension age to 68 between 2037 and 2039. This comes as the latest projections from the Office for National Statistics show that the number of people over state pension age in the UK is expected to grow by a third to 16.9 million in 2042 ‒ there are currently 12.4 million. The Department for Work and Pensions (DWP) also explained: “When the state pension was introduced in 1948, a 65-year-old could expect to spend 13.5 years receiving the benefit, around 23 per cent of their adult life”. But it is now estimated that a 65-year-old can expect to live for another 22.8 years, or 33.6 percent of their adult life in retirement.
The age at which people should be able to access their pot has been a subject of debate in recent years.
In 2019, a right wing think tank suggested that the Government should up the state pension age to 75.
The Centre for Social Justice (CSJ), founded by Iain Duncan-Smith, proposed an increase of the pension age to 70 by 2028 and 75 by 2035.
The report said evidence suggested the UK was “not responding to the needs and potential” of an ageing workforce, with hundreds of thousands of people aged 50 to 64 seen as “economically inactive”.
It recommended helping older people “access the benefits of work” by giving support to them and employers, such as increased access to flexible working and training opportunities.
It added: “Removing barriers for older people to remain in work has the potential to contribute greatly to the health of individuals and the affordability of public services.
“Therefore, this paper argues for significant improvements in the support for older workers.
“This includes improved healthcare support, increased access to flexible working, better opportunities for training, an employer-led mid-life MOT and the implementation of an ‘Age Confident’ scheme.
“As we prepare for the future, we must prioritise increasing the opportunity to work for this demographic to reduce involuntary worklessness.”
CSJ chief executive Andy Cook added: “Right now, we are not doing enough to help older people stay in work and the state pension age doesn’t even closely reflect healthy working life expectancy.
“By increasing the state pension age, we can help people stay in gainful and life-enhancing employment while also making a sound long-term financial decision.”
This suggestion was met with anger from Baroness Ros Altmann, who used to be a pensions minister.
She said at the time: “Reports of state pension age rising to 75 are shocking.
“Major changes in pension attitudes are required due to big life expectancy differentials. Using age as a strict cut off is not good policy.”
After COVID-19, some have argued that the state pension age should actually be reduced.
In August, a petition calling on the state pension age to be lowered to help open up jobs for younger people was created.
It said: “Young people are struggling to find work and losing their jobs, due to the pandemic.
“Why not allow older people to retire earlier, thereby freeing up jobs for young people?
“There would be a cost, however surely a far more positive cost than paying Universal Credit?
“Not to mention the option of restoring the balance back into young people’s favour and helping restore their future.”
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Ministers rejected the idea, and former pensions minister Steve Webb told Express.co.uk last month that calls for a lowered state pension age “won’t achieve anything”.
He said: “It’s just unrealistic, the calls for the pension age to be lowered won’t achieve anything.
“Yes we have had Covid, but broadly life expectancies are still going up. There’s already a plan to move the pension age to 67 within this decade and later 68.
“The idea the Government would spend billions now going backwards is just implausible, it’s not going to happen.
“Everyone would like to access their pension at 63 but even if there were those billions, wouldn’t you want NHS waiting lists down? Wouldn’t you want a decent social care system or public transport improvements?
“Even if there were those billions, it’s paying pensions to 63-year-olds who may still be in full-time work. It just doesn’t make any sense to me.
Mr Webb argued that lowering the state pension age would make the economy less productive.
He added: “If I’m 63 and carry on working, but you offer me a state pension instead and I stop working, that doesn’t help the economy. It takes my expertise and my productivity out of the economy.
“My job as a 63-year-old wouldn’t then get filled by a 21-year-old, there’s not an easy substitution there. I just don’t buy that argument at all.”
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