Baroness Lucy Neville-Rolfe
An independent review
On the 8th of September , Guy Opperman was relieved of his duties as Pensions Minister, Later in the day the death was announced of the Queen.
In the following week, with Chloe Smith newly appointed, Lucy Neville Rolfe submitted her view on what should happen to the State Pension Age.
Last week I submitted my independent report on the #StatePensionAge – under the 2014 Act – to the Secretary of State @NorwichChloe I would like to thank all the organisations and individuals who gave evidence and my fine team and external advisers. Next steps are for @DWP
— Baroness Neville-Rolfe (@LNevilleRolfe) September 20, 2022
And on the day that the Pensions Minister first felt able to announce his sacking, the Baroness announced her report was in.
The impact of any decision on SPA would be massive, by far away the biggest ticket item on Chloe Smith’s desk.
And while this report is supposedly independent, it is hard to think of a more ardent Conservative that Lucy Neville-Rolfe. A point picked up by Steve Webb and others.
Now we hear that Lucy Neville-Rolfe has been appointed to the Cabinet Office. While this did not coincide with the delivery of the report, it feels as if the report’s “independence” has been further compromised.
The promotion was announced after Baroness Neville-Rolfe handed in her independent state pension age report last week. Will be tricky for the Govt to now defend the independence of the report given the promotion of the author to a key Ministerial position in the Cabinet office
— Josephine Cumbo (@JosephineCumbo) September 21, 2022
Why is the State Pension Age so important?
Put simply , it matters because the state pension matters and it matters more the closer you get to it. If you find that the state pension age is receding as your expectation of receiving it is increasing than it becomes more important than if it is a distant payment on a financial horizon you have yet to engage with.
We know from IFS research that the increase in the SPA from 65 to 66 has had a huge impact on those in their mid-sixties.
Accounting for all forms of income, including state pensions, earnings, other benefits, private pensions and investment incomes, the increase in the state pension age pushed down the net income of 65-year-olds by an average of £108 per week. This is an average, and many will have seen bigger reductions in their incomes, while those who remained in full-time work as a result of the reform actually received a higher total income than if the state pension age had remained at 65.
There appears to be a clear link between this action and the increase in absolute poverty amongst those close to a receding state pension age.
Absolute poverty spikes prior to SPA
It matters because the life expectancy of those in the second half of their lives appears to be changing
ONS deaths data has been released for week ending 9 Sept.
1,571 more deaths were recorded in-week compared to the 2015-19 average. That’s 17% more, but one week in the average had a BH.
Year-to-date there have been 394,591 deaths recorded which is 6% more than the 2015-19 avg. pic.twitter.com/ZNJLwTu0R6
— stuart mcdonald (@ActuaryByDay) September 21, 2022
Thanks @ActuaryByDay . I hope this feeds into the review of the State Pension Age – being conducted by Baroness Neville-Rolfe . https://t.co/C9Eo20Q7H4
— Henry Tapper (@henryhtapper) July 14, 2022
And it matters, because the reduced payments of state pensions – and the higher direct tax payments resulting from the increase in the state pension age form 65 to 66 – boosted the public finances by around £4.9 billion per year. This is the counterpart to the reductions in household incomes caused by the reform. This exchequer gain is equivalent to around ¼% of national income and almost 5% of public spending on state pensions.- IFS research
If you’d like to hear a reasoned discussion of the issues, this video , provided by the International Longevity Centre, is a good place to start.
Wind forward to minute 19 for Steve Webb’s questioning of the review’s capacity to be effective against the expected answer from the Treasury.
Listen too to John Godfrey’s “layers of complexity” contribution from the perspective of a private pension provider at minute 25.
Typically thoughtful, Henry. Combining these state pension thoughts with the really worrying decline in private retirement provision of many (declining in absolute terms, but even more important, sharply below what people are expecting) because of the largely uncomprehended (by normal people) inadequacy of the level of DC contributions, makes the need for a proper review of the whole system – akin to the one carried out by the Prndions Commission 20 years ago – essential. The Commission was set up because of the prospect, by the middle of this century, of the majority of pensioners having to be on means tested benefits. How close are we to that again being the outlook?
Hmm, I always have a negative view when someone who has a title in the lead to produce a report on such a sensitive area as the SPA. We have seen a previous advocate of State pensions seem to change their spots once they were given a title. I suspect that all previous reports will be buried and the new one will be the order of the day irrespective of the evidence that might point to the contrary. One wonders how evidence can be so ignored or manipulated? I’m not a fan of saying that the better off should not benefit under the “new way” of looking things, but we should not ignore the basic entitlements that so many rely on. The system needs to put a basic level of support for people, those on the minimum level of income will depend upon it, those on intermediate level will us it to provide a dedent level of support, and those who don’t need it will treat is as an irrelevance but probably still take it.
We need a consistent approach to how this approached so that those in the first 2 groups know what to expect, rather than getting unexpected changes