I have shared some thoughts from experts – not adulterated by my bastardisation, but as they came to me. They are reactions to my blog this morning.

This is the tweet of the article in the Times, the tweet by Tom McPhail. I complained that we couldn’t go that big but Andy Young thinks you can and should- agrees with Tom except for the use of private pensions to bridge between the point you lose work income and the point the state pension arrives. There he agrees with me!

See if you can follow Andy’s logic

We are going to have something like  a cross between what Tom says and what you say.

The minimum State Pension Pension Age will rise and I suspect significantly. 75 seems a good start but not enough in due course.

In passing it is interesting to see the second paragraph of the Deliverables for Suzy Morrissey for her Review –

3.1. The Independent Report:

• should deliver a set of factors, ……
• should assume that current policies regarding the entitlement and value of State Pension remain unchanged over the long-term

So the triple lock to be assumed for the long term?   That will push up the projected costs and the speed with which minimum SPA will have to rise if costs (and meeting them through NI or taxes)- are held stable.

Obviously there will be a phasing in period whatever happens. But we will find (as other countries) with State Pension moving well into the 70’s.

If we were there now or soon I could agree with Tom. We could pay a higher BSP. As it happens we do already. You get 1% more for every 9 weeks or around 5.8% a year. So something like 46% more if you start at 75 rather than starting at 67. (The increase currently rises with CPI rather than Earnings or triple lock.). So people can indeed use work and other pensions/savings and start their state pension later.

We could change how we present BSP. We could say the full rate is at age 75 and it is reduced by (say) 1% for every 10 weeks early. We can decide how early is the earliest age depending how low we are content for the lowest rate to be as it is for life. We could have rules to avoid gaming means tested benefits if necessary.

But if we just aim to keep it simple we will be at 75 pretty quickly if triple lock persists. People will have to work longer if they can (and demographic change will require that never mind the money numbers which is the savings industry silo issue).  They will have to save more if they want to stop work earlier than that higher SPA. And as the BSP will never be high enough for everyone to be satisfied, they will have to still save more to top it up.

People who cannot work should be adequately protected but that is unlikely to be earnings related so we will need insurance benefits pre 75. As you say.

But this is still a narrow pensions perspective. Higher social care and health care demands and costs in retirement will have to be met. That is the big issue – how met?  Thinking pensions issues can be resolved simply within the pensions silo is wrong.

We will have to think bigger, not just big.

Tom has got some praise from Benefits Jack, our American correspondent.

I like Tom’s bridge concept a lot – but make it the DEFAULT, not a MANDATE. Make it one of the possible retirement goals for individuals who enter the workforce today, and those who entered in the past who have managed to save and invest.

I understand his proposal to be: A state pension to commence at 75 at an amount where “people could actually live on it” (however that is determined by people much smarter than me). I would index it for post-commencement inflation. That would be coupled with changes in employment laws designed to nudge individuals to continue employment and employers to foster continued employment beyond yesterday’s typical retirement ages (when life expectancy was less, much less). Then, of course,  couple that with a disability state pension provision for those who become incapacitated/unable to work at any occupation for which they are qualified for by education, experience or training.

More than 20 years ago, I sat through a presentation by the exceptional economist John Shoven, of Stanford. He confirmed that Baby Boomers (the oldest had not yet reached age 60) and future generations would either have to work longer or retire later. Slowly, the trends starting at the turn of the Century show Americans doing both. More Americans are working longer. More Americans are deferring commencement of retirement benefits to later ages. For example, the average age at Social Security commencement moved from 63 to 65 over the past 25 years. That’s huge!

In the states, to foster employment at older ages, one change we need to make (you don’t) is to reverse changes made in 1982 and 1984 which flipped Medicare from primary to secondary for workers or spouses who continued employment past age 65 and remained eligible for employer-sponsored coverage. That is, employers would find it much more attractive to hire older workers or to continue older workers’ employment without having to shoulder health coverage costs.

In the states, we also need to move our Social Security Normal Retirement Age to age 70 from age 67 (today, normal retirement age 67 applies to anyone born in 1960). Today, all can defer commencement up to age 70 if they prefer a higher nominal monthly benefit.

Concurrently, because the Required Beginning Date for distribution of tax favored savings will be age 75 (also for those born in 1960 or later), we also need to move Social Security’s deferred retirement date from age 70 to age 75.

That is, there and here, it is long past time where we confirmed to workers, especially those entering the workforce TODAY at ages 18 – 24, that if they want to retire at a traditional retirement age of 62 or 65 (the historical “normal”), that to finance such a goal, that they would need to commit to consistent savings of 10% – 15% of income over the next 40 years.