Ever receding retirement?

The big headline in today’s Autumn Statement was the Chancellor’s announcement to increase state pension age. George Osborne said that state pension age would be set following a general principle by which people could expect to spend a third of their adult life in retirement. He declared that state pension age needs to keep up with life expectancy. On current assumptions, this would mean an increase to 68 in the mid 2030’s and 69 by the mid 2040’s. This follows a number of increases to State Pension Age in the last three Pensions Acts, the most recent of which speeded up equalisation so that women’s State Pension Age will increase to 65 between April 2016 and November 2018 and then to 66 for both men and women between December 2018 and October 2020. The current bill going through parliament proposes an increase to 67 between 2026 and 2028.

We have two broad concerns with this pronouncement. Firstly life expectancy figures on their own do not tell the whole story. Whilst life expectancy at birth (in England) for men is 83 the life expectancy gap – the gap between the highest and lowest life expectancy estimates by local authority is almost 9 years. The picture looks even worse when you examine healthy life expectancy which is only 64. And the male healthy life expectancy gap by local authority is over 15 years with Richmond at one of the scale where it is just over 70 compared to Manchester where it is just 55.

Secondly increases in state pension age must be accompanied by the certainty of a decent state pension. The Chancellor proudly claimed that the ‘triple-lock’ (a system by which the pension is uprated by whichever is higher of earnings, prices or 2.5%) ensures a ‘fair and generous increase in the state pension every year to those who’ve worked hard all their lives’without mentioning that this guarantee currently only lasts until the end of this Parliament in May 2015.

The current Pensions Bill provides an opportunity for both the triple lock to be permanently included in legislation and for far greater detail to be included about the systematic review of state pension age. The Bill introduces 5 yearly reviews for future increases and the DWP has today published further details of how these reviews will be carried out which now need to be debated and incorporated into the Pensions Bill. These reviews will make significant decisions which affect people’s lives and financial planning and should be taken as a series of carefully informed decisions by independent experts rather than part of a political set piece announcement as we saw today.

View Age UK's full briefing on the Autumn Statement here