Pensions - Articles - ACA maps out options for early access to State Pension


On the assumption that, in aggregate, longevity continues to improve, whilst significant differences in life expectancy continue to exist between different sectors of society, we believe that the retention of a universal but rising State Pension Age will become increasingly difficult’, says the Association of Consulting Actuaries (ACA) in its submission to the ‘Cridland’ Independent Review of State Pension Age, commissioned by the Government. However, the ACA thinks that there are practical difficulties in identifying specific groups for differential State Pension Ages.

 The ACA paper says that further thought should be given to alternative measures that would allow individuals with shorter life expectancies to access their State Pension or equivalent income before the official State Pension Age.

 The ACA paper explores the suitability of the current State Pension Age (SPA) and the issues raised if further increases are needed should longevity improvements continue, having regard to the limitations that exist in projections of future life expectancy. It also considers areas such as the availability of employment opportunities should many more people seek to work longer, how healthy life expectancy may present challenges for many individuals and matters such as how fairness can be assessed within the need for an affordable and sustainable State Pension system.

 The ACA paper considers a number of models that merit further consideration as ways of maintaining a universal SPA, whilst mitigating the impacts on those with the shortest life expectancies.

 Some of the models could be no cost or low cost to the Government, particularly those encouraging people to use non-State pensions before reaching SPA, or allowing broadly actuarially neutral early access to the State Pension, albeit there would be costs associated with implementation and means-testing implications.

 Other models, including where, for example, a State benefit might be introduced for individuals meeting certain ill-health criteria ahead of SPA, or where there could be early access to a State pension based on the length of working life, would involve additional costs. These would require reduced State spending elsewhere or might mean an even higher SPA for the rest of the population.

 The ACA paper rules out one possible approach – giving all individuals within a certain age range a right to draw down their State Pension as they wish, akin to the new DC pension freedoms. This was judged to be impractical and likely to mean too many would exhaust their State Pension unless there were constraints on annual withdrawals.
 
 Commenting on the paper, ACA Chairman, Bob Scott said: “We would be very happy to work with the Independent Review of State Pension Age in developing the thinking around the models we have explored or others that might be proposed via the consultation exercise. 

 “We would also underscore the need for any future changes to take proper account of the need for State reforms to be considered alongside the pension regimes and rules applying in respect of private pensions. A joined-up approach that simplifies both State and private pension rules would represent a welcome statutory innovation!”

 A copy of the ACA submission is available at www.aca.org.uk (page: consultation responses) or here
 
  

Back to Index


Similar News to this Story

Wish list for the occupational pensions industry in 2025
As one year closes and another begins, it's an opportune moment to set our sights on the future. The UK occupational pensions industry faces nume
PSIG announces outcome of Consultation
The Pensions Scams Industry Group (PSIG), which was established in 2014 to help protect pension scheme members from scams, today announced the feedbac
Transfer values fell to a 12 month low during November
XPS Group’s Transfer Value Index reached a 12-month low, dropping to £151,000 during November 2024 before then recovering to its previous month-end po

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.