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.
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
— 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.