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  • May 2014
05

UK state pension age increase 'short-changes Scots'

Open-access content 13th May 2014

Lower life expectancy in Scotland means the country’s pensioners will be ‘short-changed’ by as much as £11,000 compared to the rest of the UK if it stays tied to Westminster, Scottish ministers have claimed.

In its Life expectancy and the state pension report, published yesterday, the Scottish Government noted that pensions were currently reserved to Westminster, which plans to increase the state pension age to 67 from 2026.

But in its first year as an independent state the Scottish National Party has said it would establish a self-governing commission to consider the appropriate pace of any further change to the retirement age beyond 66.

Shona Robison, the newly appointed Cabinet Secretary for pensioner's rights, said the research made it clear that 'Scots are already short-changed' when it came to pensions.

'The lower life expectancy in Scotland means it would be fairer for people in Scotland if the increase in the pension age was postponed,' she said.

The research shows that a 65 year-old woman entitled to a total pension of £160 per week could expect to get about £11,000 (£10,000 for a man) less in Scotland than south of the border. For a woman who lives in Glasgow - the largest city in Scotland and the 4th biggest in the UK - this pension gap increases to £22,000 for a woman and £29,000 for a man.

Comparing Glasgow with Harrow in Greater London, which has the highest life expectancy for men in the UK, the pension gap grew to £50,000. And when comparing Glasgow with Camden, which has the highest life expectancy for women in the UK, the pension gap rose to £46,000.

Robison continued: 'We want to make sure that the pension age suits Scottish circumstances - and, on average, people in Scotland have fewer years in retirement receiving the state pension because life expectancy is lower.'

Scotland's deputy first minister Nicola Sturgeon, added: 'This research clearly sets out why examining a delay to increase in retirement age beyond 66 would be the fairest option for people in Scotland.'

A Department for Work and Pensions spokesman said spending on pensions and other benefits would be more affordable for Scotland if it remained part of the UK.

'This is because the broad shoulders of the UK help to spread risk and provide a crucial safety net against an ageing population in Scotland.

'The current Scottish Government has still not said how they are going to pay for around £1.55bn a year social security costs over the next two decades. It needs to come clean about how it would fund these proposals ­- it is difficult to see how this support would be maintained without higher taxes or cuts to services.'

Scottish Labour MP and shadow pensions minister Gregg McClymont offered a robust response.

'For the nationalists to suggest the best way to be able to pay for pensions in Scotland is if we continue to die younger is frankly appalling. If this is the extent of the nationalists' ambition for Scotland the Scottish Government should be ashamed and immediately apologise for insulting the intelligence of Scots,' he said.

'The nationalists want to make this a Scotland v England contest, but there are huge differences in life expectancy across Scotland's towns and cities. The life expectancy of a man from the East End of Glasgow is significantly shorter than for someone from Bearsden. Instead of trying to create more divisions we should we working to improve the life expectancy of all the people of our isles.'

This article appeared in our May 2014 issue of The Actuary.
Click here to view this issue
Filed in:
05
Topics:
Pensions
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