As the UK government probably planned when they appointed a safe, if boring, pair of hands in John Cridland, his review of the State Pension Age (SPA) lacks imagination.
• State Pension age should rise to age 68 over a two year period starting in 2037 and
ending in 2039;
• State Pension age should not increase more than one year in any ten year period,
assuming that there are no exceptional changes to the data.
In addition, he recommends ending the triple lock on pension increases. Under his recommended timetable, State Pension spending would be 6.7% of GDP in 2066/67, which is a reduction of 0.3% compared to the principal OBR projection. If the triple lock is withdrawn, spending will be further reduced to 5.9% of GDP by 2066/67.
To address the huge disparities in life expectancy, he recommends some modest changes to the benefit system, support for carers and the joy of a mid-life MOT.
The review does recognise that public sector pension schemes now follow the SPA. This is a big issue for a range of public sector workers who undertake physically or mentally demanding jobs. He makes no recommendations on this point but reminds HM Treasury that they agreed to review the link between State Pension age and public sector pension schemes, after the Government has completed each State Pension Age Review. Don't hold your breath on this one!
For many people, certainly those on higher incomes in less demanding jobs, this increase in the SPA is probably manageable. Although it does assume that life expectancy will continue to rise exponentially. However, it is already the case that fewer than half of people are in work by the time they reach state pension age. Raising the SPA to 68 or 70 is likely to increase this proportion.
His recommendations are based on average life expectancy, a statistic that conceals huge inequalities, based on location, health, working and living environments. This increase in the SPA will affect poorer and less able bodied people disproportionately. While it also affects Scotland with our lower life expectancy, I accept that the case for a lower Scottish SPA is weak. The differences in life expectancy within Scotland are far greater than those with the rest of the UK.
With more imagination, he could have given more serious consideration to a flexible retirement age that takes into account the arduousness of work and the length of a persons working life. It would be complex to manage, but society needs people to do tough jobs that contribute to reduced life expectancy. These workers are in effect subsidising the better off, healthier individuals who will live longer and take more than their fair share out of the total state pension pot.
Cridland argues that a single state pension age is, “simple and clear and provides a trigger for pension planning”. It may be simple, but real people's lives are complex. The SPA, as the current data shows, is not the same as the actual retirement age.
This report recommends increasing the SPA using the standard broad brush approach. It will leave many reliant on the reducing social security system and insecure part-time work.
A change to retirement at 70, even if a gradual process, needs extensive support for mid and later life career changes, personal development throughout their working life and decent levels of income support. It also needs a more imaginative approach to retirement age. Sadly, imagination is the element most lacking in this report.
The full review report can be downloaded here https://www.gov.uk/government/publications/state-pension-age-independent-review-final-report