Fair, right or honest? The new State Pension Age for Generation Y

generation-rent-2

If you were born between April 6th 1970 and April 5th 1978 and between 39 and 47, this affects you. You have just slipped one year back from your state retirement age, have another year’s National Insurance Contributions to pay and you’re facing a state pension age of 68.

Fair?

Fairer for some than others. If you have no intention of retiring this may not bother you much. If the reason you go to work is because it’s one day closer to retiring, this will seem unfair.

By and large the people who love their jobs are the higher earners and in control of how long and how they work. Those who hate their jobs have little control of their career or how they can put an end to the “toad work”.

Simply treating everyone the same is unfair- certainly if you listen to Ros Altmann who would have a state pension age that reflected individual’s longevity. This segmented approach could work if big data could pull together our postcode, our medical record and our lifestyle to tell Government how long we were going to live. Is that the kind of fairness we want? Or would we prefer a fairness where those who die early, subsidise those who live longest. To date, we have worked on the latter model, but don’t expect Cridland to cap out the arguments for personal retirement ages – they have a fairness of their own.


Right

I’m not sure that Cridland was using the right data, the latest mortality data in the UK sheds a different light on future longevity than the 2015 ONS numbers that Cridland used. If there really is a change in direction for longevity, then Cridland will be wrong and the need to push back SPA will disappear. Some people thought that the reason the Government missed its May 8th deadline for publishing its plans was that it was rethinking them in the light of the new data.

Tories kill

I’m not sure you can stretch the argument this far- mind!

 

They were wrong, the Government just didn’t want to announce bad news prior to the election. This was not right. As I was in the room when the Pensions Minister found out about the next election and as John Cridland was waiting outside when I finished the meeting, I have no doubt that the timing of the announcement was politically motivated! Yesterday was a good day to bury bad news.

I personally think Cridland was right to stick with a universal state pension age, to push back SPA for this cohort of people and I think his idea for a mid-life MOT is a good one.


Honest

The Government has been accused of being sneaky in its introduction of changes to SPA in the past. Most vociferously by the WASPI women who campaign against the changes to retirement age of a group of them who weren’t well informed of what were going on and who feel particularly hard done by.

The Government need to try doubly hard to communicate not just the changes but the impact of those changes. The cost of the State Pension has recently been estimated to be about the same as a Lamborghini, it’s a big ticket item for the Government to pay. It is small wonder the SPA attracts attention in the Treasury and DWP.

But this subject did not even trend on Twitter. For most people , pensions will continue to be too hard, too distant and too inaccessible and people will hide under the covers and go to sleep rather than to listen to the arguments.

If the Government is serious about pensions, it has to invest in getting the messaging right. People need to know not just what has changed but how the changes will effect them and what they need to do to get back to where they were.

There’s a good discussion on this on the Radio 5 wake up to money podcast. I’ve just got back from the studio this morning. I’m sure if we could have more of these, we’d keep the Government honest!

You can listen to the Podcast here, the discussion is at 32 minutes.

 

 

 

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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5 Responses to Fair, right or honest? The new State Pension Age for Generation Y

  1. Adrian Boulding says:

    Just save a bit more in your workplace or private pension scheme to bridge the gap between when you choose to retire and when Government choose to let you have your State pension. Adrian

    Liked by 1 person

  2. henry tapper says:

    ILC suggesting this should be 18% pa – this is more than a bit more! BlackBullion (Vivi) in the FT saying this would scare the hell out of most youngsters- it’s more than we pay in tax!

    Liked by 1 person

  3. DaveC says:

    Do you think this is the last move in the state pension age?

    I see it moving further and further, more so as life expectancy creeps onwards.

    I have 30yrs until I retire and I fully expect to get nothing.

    Until gov can start to reduce debt rather than reduce the deficit, where is there scope for more optimism?

    If your only hope is that inflation erodes these debts, it’ll also reduce the usefulness of your retirement savings.

    Why should I remain positive when this change is just indicative of a pension system that is now very clearly a ‘young and poor pay old and wealthy scheme?’

    Like

  4. Maria Padley says:

    As a forty-something affected by this change, I’m not even slightly surprised by it. Since they first announced the original increases to the SPA, I have (perhaps cynically) assumed that there would probably be more. But then, I’m reasonably well-informed and have been professionally involved with pensions, on and off, for most of my career.

    My nearest and dearest (and colleagues) have always been surprised when I’ve told them that I’m planning for a likely retirement age of 70, due to future goal-post moves. I can’t make up my mind whether there is a major communications issue about the age increases, or whether most people are just less cynical than me.

    Liked by 1 person

  5. henry tapper says:

    There is a 10 year rule in play here; the DWP has to give you 10 years notice of future changes, this means that once you get to 58 you should be safe at 68, assuming you don’t get pushed back to 59 before then. The good news is that in real terms your pension is getting bigger the longer you wait, as long as the triple lock continues. It’s not all bad news Maria

    Liked by 1 person

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