The Pensions Policy Institute is saying that raising the state pension age would solve the current pensions crisis. Their new report, “Raising State Pension Age: Are We Ready?” sets out the arguments in favour of this (fairly unpopular) move.
1. Raising State Pension Age is a legitimate and timely subject for proper debate – the UK cannot afford to avoid it any longer.
2. 90% of people now live to collect their pension, compared with 66% when the current pension system was set up, and people are living to collect their pension for 8 years longer. To take full account of these startling improvements in longevity the State Pension Age would be in
the region of 72 to 75.
3. Raising State Pension Age opens up options to increase the level of the state pension. If SPA were 70, then at no extra cost, the state pension could be around £110 per week, or around £130 for over 75s (in today’s prices). Raising SPA could mean that older pensioners no longer have
to rely on means-tested benefits.
4. It would take many years to raise the State Pension Age, so that people have time to adjust their work and savings plans. A practical solution would be for the change to take place between 2020 and 2030. Then only people currently aged 42 or less would have to wait to 70 for their state pension.
5. Raising State Pension Age should not be announced without activating policies to support those potentially disadvantaged by the change. Better understanding of health trends is required; as are policies to help older people take suitable jobs.