Commenting on the report published today, Malcolm McLean, senior consultant at Barnett Waddingham, said: “The report, whilst thoroughly researched, confirms there is no silver bullet to address the problems of an ageing society and facilitate state provision of a benchmark retirement income other than increasing the state pension age. “Although it suggests a few interesting ways of alleviating the problem:
A new system of carer's leave, allowing older people with caring responsibilities to have time off work
A mid-life "MOT" to help people take decisions about work, health and retirement
Some vulnerable people in their 60s should have access to a means-tested benefit, along the lines of pension credit
People could defer drawing their pension, taking higher benefits later
Withdrawal of the triple lock protection from the start of the next parliament
“The report does not recommend early access to the state pension, as implied in its interim report might be a possibility. This will come as a big disappointment to many. We surely cannot simply continue pushing back the state pension age ad infinitum and the point must come where a line has to be drawn somewhere. Longer lifespans overall do not necessarily equate to longer working life ability and we should accept that for some people a state pension age of 70 or beyond will mean they will not live long enough to draw their state pension – despite years of contributing to the system from their national insurance contributions.
“Early access to a state pension in the future from a minimum age say 64 or 65 years needn’t be complicated, as some would have us believe. The pension could be paid on an “actuarially reduced” basis as in private occupational and public sector schemes and be available to all UK citizens without reference to where they live or in what profession they have worked. If we can pay a 5.8% increase for deferring receipt of the pension for a year after state pension age we can surely do that in reverse for early retirement without undue difficulty”
Andrew Tully, pensions technical director, Retirement Advantage commented: ‘Set against a backdrop of an ageing society, costs for funding the state pension are predicted to rocket by 39% to £152bn a year by 2028, so it is no surprise some tough choices needed to be made with the Cridland review suggesting accelerating increases to the state pension age, and removing the triple lock from 2020 onwards.
‘Many people believed the review may recommend more flexible access to the state pension at a reduced rate. This is not being taken forward at this point. Any change would have introduced significant complexity, particularly around helping people decide the optimal age to start taking their pension, and may have meant many people having less income in older age when they may need to help fund care costs, whether that is in the home or residential care.
‘Despite the increases to state pension age currently taking place and the acceleration of future increases, our Retirement Sentiment Index shows future retirees continue to plan for a retirement age of 65, even though that is highly likely to be before their state pension age. Future generations expectations will need to be managed and it is crucial the government learn lessons from recent experience to ensure future changes are clearly and widely communicated.’
Commenting on the Cridland Review issued today, Adrian Boulding, Director of Policy at NOW: Pensions, said: Whilst obviously life expectancy is increasing and we can look forward to a long retirement, our research shows that people would like to be able to retire whilst they are still healthy enough to enjoy themselves - nearly half (48%) of UK adults who have not yet retired, want to retire by the time they are 61 and, of these, 69% said they want to finish work when they’re still healthy enough to enjoy themselves. 18% don’t think they will physically be able to work beyond this age.
However, the research also showed that some people are realising that what they want and what they can afford are two different things, and one in two (50%) people are happy to save more into their workplace pension to retire earlier, whilst two in five (41%) don’t want to work in later life but financially think they’ll have to.
Boulding continued: “If people are going to use their auto-enrolment pension pots to bridge the gap between early retirement and State Pension age, then they are going to have to pay more into them first. The
Commenting on today’s Cridland Review of the state pension age, Alistair McQueen, Head of Saving & Retirement at Aviva said: “The State Pension is cherished by the British people. Aviva’s own research [1] identified that an overwhelming 98% of people viewed it as being important to society and any changes must therefore be undertaken with care and widespread consideration. We believe that the Cridland Review [2] is rising to these needs.
“The long-standing state pension ages of 65 for men and 60 for women were set in 1948 at a time when life expectancy at birth was 66 for a man and 71 for a woman. Today these life expectancies have risen by more than a decade, to 79 and 83 respectively. Life expectancy is only one consideration, but it does suggest the state pension age can’t stand still.
“After nearly 60 years of stability, four changes to state pension ages have been agreed since 1995. Sporadic changes are in no-one’s interest. Aviva therefore welcomed the agreement in 2014 to ensure a formal review every five years – the first of which we see being published today.
“All concerned must carefully consider Cridland’s recommendations. If Parliament does agree to further change, there are important responsibilities that come with change.
“Britain’s 30 million workers must be fully informed of these changes and the system of automatic enrolment must be fit for purpose. Aviva has stated that current minimum contribution levels are too small and coverage is too narrow; and employers must take action to support a longer working life. We note with enthusiasm Cridland’s proposal for a mid-life financial MOT for all. Automatically enrolling workers at age 22 and then leaving them unsupported until retirement is not good enough.
“Changing the state pension age is one thing. Ensuring all understand these changes and are helped to adapt is the real challenge.”
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