After over a year of looking at a wide range of evidence, and meeting many individuals and organisations, John Cridland’s Independent Review of the State Pension age has published its final report. John Cridland was tasked by the Government to make recommendations around a ‘fair and sustainable’ State Pension age (SPA) from 2028 onwards.
The headline recommendation is that SPA should rise from 67 to 68 between 2037 and 2039 which would affect people in their mid-40s and younger. A range of projections around future average life expectancies are given to show why this recommendation was made.
However, the 127 page report doesn’t just look at average life expectancy. It provides lot of information about the experiences of different groups. For example, it shows clearly that life expectancy depends on where we live. So men in Greater London can expect to live around 5 years longer than those in Greater Glasgow. However, the variation within these areas are even greater, with a 12 year difference between those in different parts of Glasgow. It also shows that while likely future private pension levels vary for different generations, there are far greater differences within generations. And it rightly highlights the difficulties that carers and those who are ill or disabled face in working longer, and the challenges they, and others including women and self-employed people, face in building up private pensions.
In recognition of some of these factors John Cridland sets out a range of recommendations to ‘smooth the transition’ to a higher SPA. The main ones are:
- When SPA starts to rise to 68, the age at which pensioner means-tested benefits (which are paid at higher levels) for those unable to work due to caring or ill health, should stay at 67 and then remain a year below SPA.
- People who defer SPA should be able to receive a lump sum payment of their State Pension and there should be the option for partial deferment.
- Carers in the workplace should be supported to by a new system of Statutory Carers’ Leave and employers should have eldercare policies.
- The Government should introduce a mid-life MOT to help people make choices about work, health and retirement.
- Government and employers should make more use of older workers as trainers.
- The Government should communicate directly with people affected by rises in SPA.
- People should have at least 10 years notice and SPA should not rise more than 1 year in any ten year period ‘assuming there are no exceptional changes to the data’.
While these changes are intended to support different groups, even with increases in SPA, the report argues that the country is facing economic pressure due to the ageing population. It recommends that the triple lock should be withdrawn next Parliament if ‘further savings are needed’.
So what is Age UK’s view on the report? Well, firstly we believe it does a good job in setting out the issues and highlighting those who will be most affected by rises in SPA. We also feel that, while recommendations go some way to mitigating the rise for people reaching SPA in the future, much more needs to be done and change needs to happen sooner. For example, the proposal to provide early access to pensioner means-tested benefits for some groups only applies when SPA starts to rise to 68 in 2037, and then for only for one year. While this reflects the Committee’s remit to look at SPA after 2028, the recommendations do nothing for the many people now in their 50s and early 60s who are currently unable to work and are struggling to manage. We also are firmly of the view that the triple lock needs to continue to help current and future low income pensioners, who rely, or will rely, heavily on State Pension income in retirement.
In terms of next steps, the Government must consider this report as it makes its decisions about future SPA – the clock is ticking as it is committed to publishing its own review by May 2017. Age UK will be looking at the Cridland Report in more detail and letting the Government know our views about the recommendations and what need to be done to protect those affected by rising SPA, both now and in the future.