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The Actuary The magazine of the Institute & Faculty of Actuaries

Calls for no further increase to the State Pension age

The Pensions and Lifetime Savings Association (PLSA) have today called for no more increases to the State Pension age and for the so-called ‘triple lock’ system to be scrapped.

No more increases to the State Pension age is 'the fairest approach' ©Shutterstock
No more increases to the State Pension age is 'the fairest approach' ©Shutterstock

They insist that raising the age people receive their state pension could hurt those with lower than average life expectancies, and individuals who might struggle to stay in the labour market due to below average healthy life expectancies.

In addition it is argued that the ‘triple lock’ be replaced by indexation in line with earnings so that the state pension maintains its current value of around 30% of average median earnings.

PLSA director of external affairs, Graham Vidler, said: “We believe the fairest approach for current and future generations of pensioners is to drop the triple lock and halt further increases in State Pension age.

“A State Pension maintained at 30% of average earnings can provide a strong basis for future retirement incomes.

“Removing the triple lock can keep it affordable without the need to increase State Pension age still further to the detriment of people with poorer health.”

The PLSA have highlighted that the UK is set to have the highest State Pension age, at 68, of any OECD country.

They believe that any plans to tailor pension ages for different people would make the system too complex, decrease efficiency, and could confuse savers.

“Proposals for a variable pension age, while attractive in tackling socio-economic differences, would sacrifice the simplicity and clarity of the current system,” Vidler continued.

“On balance, we support the current system of a single State Pension age for all.”

These suggestions are in response to an independent review of the state pension age launched in October last year and closed at the end of December, led by John Cridland CBE.

There are concerns that the Department for Work and Pensions (DWP) and the HM Treasury are ‘pulling in opposite directions’ in what they want to see from the review, with policy conflicts between the two departments.

Hargreaves Lansdown’s head of retirement policy, Tom McPhail, believes that interdepartmental cooperation is needed to ensure consistent pension policy-making, with a focus on better engagement to help individuals plan their state and private pensions.

He said: “The DWP and the Treasury seem to be developing fundamentally contradictory expectations of the pensions system.

“It isn’t possible to have a system which both serves the needs of flexible later-life employment patterns, and at the same time imposes ever more complications and restrictions on the individual investor.

“The Cridland review should be part of this overall effort to reconcile these contradictions and to explore the potential for joined-up policy-making.

“Ultimately the UK’s pension system must meet the needs of individual savers and investors as well as delivering good value to taxpayers.”