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  • January 2014
01

Sharp rise in state pension age 'unfair on older workers'

Open-access content Monday 13th January 2014 — updated 5.13pm, Wednesday 29th April 2020

Actuaries Buck Consultants have disagreed with the ‘dramatic’ rise in state pension age proposed by the Institute of Economic Affairs, saying changes must be balanced to protect those close to retirement.

The free market think-tank last week published a paper suggesting that the UK should accelerate the introduction of a later retirement age, increasing it by two months every quarter from November 2018. This would mean that the state pension age would reach 68 by as early as 2023.

But Buck Consultants challenged this recommendation, arguing that all individuals caught by this proposal would have less than 10 years to reach what they believed was the age at which they would collect their state pension.

Fraser Smart, Buck's managing director, said: 'Whilst a long-term increase in the age at which state pension becomes payable is seen as politically acceptable these days, and proposed rises have not proved a vote loser so far, any increases must be balanced by the need to protect those who are close to retirement and don't have the time (even if they have the money) to readjust their retirement plans to allow for losing the state pension for a considerable extra period of time.'

According to the IEA's proposal, affected individuals would have to work for an extra three months to get one month closer to their state old age pension. The think-tank called for opportunities and incentives to be developed to allow people to continue some form of paid work into old age.

But Smart noted that the UK is one of the least generous state pension systems in western Europe. He said for many people the arrival of their state pension was not an incentive to leave work.

'It's that they cannot afford to retire until they get the state pension,' he said.

He added that postponing the already 'ungenerous' state pension for a number of extra years would force those close to retirement age to remain in employment longer against their will.

'This is just not on for those too close to retirement to make significant changes to their pension savings now'.

This article appeared in our January 2014 issue of The Actuary.
Click here to view this issue
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Topics:
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