State pension age. What a hospital pass!

When Guy Opperman handed his papers to Laura Trott, the file I suspect he enjoyed passing most was that marked “review of state pension age”.

Can any Government  increase SPA with an election looming (unless it is taking an altruistic view or has accepted it cannot return to power for the best part of a decade in which it’s a cunning long term tactic. I don’t think politics works like that (BTW)

If not – how can this Government defer a decision?

There is no doubt that there has been a change in actual mortality compared with assumed mortality since the last (pre-pandemic) review.

Asking the Government Actuary  to update last year’s long term projections to take account of what “excess deaths” are telling us buy the Government time.

The Government can also wait for new population projections arising from census information and they can adjust the apportionment of  national insurance to balance the books in the short term

In the meantime the DWP can ditch the legal framework focused on longevity in favour of an approach that looks both at longevity and fertility. It is only a matter of time for us to work out that the number of people coming into the workforce supports the number of people leaving it.

The sweet spot that I talk so often about, that governs the payment of pensions in the funded sector is also present with public pensions which while theoretically pay as you go, are backed by a “national insurance fund” – UK pension’s own “dark web”.

While the state pension will not close, the point at which the sweet spot starts and closes in the timeline is finite, if we push out the entry point for people coming into work and dilute the input , then we have to push out the state pension age (or dilute the output).

A quick history lesson

From the 1940s until April 2010, the State Pension age (SPA) was 60 for
women and 65 for men. Legislation to increase the SPA was introduced in
• The Pensions Act 1995 included provision to increase the SPA for women
from 60 to 65 in stages between April 2010 and 2020, to bring it into line
with that for men.
• The Pensions Act 2007 made provision to increase the SPA from 65 to 68
in stages over the period 2024 to 2046.
• The Pensions Act 2011 brought forward the increase in women’s SPA to 65
to November 2018, at which point the equalised SPA started to rise to 66,
which it reached in October 2020.
• Section 26 of the Pensions Act 2014 brought forward the increase to 67 to
between 2026 and 2028.

What’s happened since?

On 14 December 2021, the Government launched the second periodic review of
the State Pension age, with a consultation document published in February
2022. As in 2017, an independent report, this time led by Baroness NevilleRolfe, and a report from the Government Actuary’s Department will be published, followed by a final report setting out the Government’s proposals.

The deadline for this is May 2023.

Compared to data used in the 2016-17 review, more recent projections have
not been as optimistic about improving life expectancy.

Some commentators (notably the actuaries LCP) have argued that if the Government maintains the principle that people should expect to spend a fixed portion of adult life in receipt of State Pension, planned rises in the SPA should be slowed.

However, unlike for the first independent review, the Government has not
committed in advance to this principle or made fresh commitments to fixed
notice periods for changes.

The terms of reference for the independent report instead asked Baroness
Neville-Rolfe to consider

“whether it remains right for there to be a fixed proportion of adult life people should, on average, expect to spend over State Pension age.”

Similarly, the consultation document asks whether it is

“reasonable to give people a fixed period of notice for State Pension Age changes, and if so what period.”

The independent report was completed in September 2022 but has not yet
been published.

While it can, the DWP would do well to defer committing itself. There are many other fires to fight and this one looks ripe for the next Government.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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