pension age rise

Tories urged to rethink the Increase in State Pension Age

havenifa

havenifa


Posted on: 27th February 2020

The UK government is currently facing pressure to scrap the planned state pension age rise. This comes after the news that the life expectancy for the poorest women was found to be falling, with health inequalities spreading across the country.

This came from a call by the Labour Party after a world-leading expert on social deprivation and health concluded that after a decade of government austerity, there has been a stall in the improvement of life expectancy over a sustained period for the first time in 120 years.

In a recent report, Michael Marmot, who heads the Institute of Health Equity at University College London, discussed the decline of women’s life expectancy between 2010-12 and 2016-18 in the poorest parts of the UK. At the same time, there have been negligible increases for men in the same communities.

Comparatively, life expectancy has risen for both genders in the most privileged areas across the country.

“The government must immediately cancel the planned rises in the state pension age,” said Jack Dromey, shadow pensions minister. “The Conservatives have repeatedly raised the state pension age, even as austerity brings down life expectancy.”

The state pension age is set to rise from 65 to 66 by October 2020. Between 2026 and 2028, it will increase again to 67.

In 2017, the government accepted recommendations to bring forward the scheduled rise in SPA to 68 by 7 years from 2037 to 2044. The reason behind this is the increase in life expectancy.

According to a recent analysis by Willis Towers Watson, the professional services firm, Men and women turning 68 in 2028 were now expected to live an average of 2.5 years less. This is a change from 2014 forecasts when the rise to 67 was implemented.

Earlier this week, a spokesperson for the Department for Work and Pensions said: “The 2017 State Pension age review proposed increasing state pension age to 68 between 2037 and 2039. We have committed to undertake a further review before considering whether to legislate for this or any other further changes.”

Baroness Ros Altmann, a former pensions minister, said that the SPA should offer flexibility to account for differences in life expectancy.

“There is a nearly 20-year difference in healthy life expectancy between the poorest and wealthiest parts of the country,” said Baroness Altmann. “If someone genuinely is not well enough to work in their early 60s, and perhaps has paid 45 years or more National Insurance [10 more years than the minimum 35], allowing an early access State Pension would finally recognise that average life expectancy is not a useful yardstick for those who die young.”

On a separate note, experts did not see this fall in life expectancy among the poorest to heavily impact annuity rates or company pension scheme deficits. This is despite the fact that both of these are sensitive to changes in mortality rates.

“Pension scheme members and insurance company policyholders, who tend to be from less deprived areas on average, generally have longer life expectancies than the general population and actuaries do allow for this in their calculations,” said Cobus Daneel, chair of the CMI Mortality Projections Committee, which provides life expectancy analysis for the insurance industry.

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