I’m 64 and three years from pension in Great Britain – and Webb warns that I’m getting Britain into trouble

While Ian Johnston reports of pushback on a rise to a state pension age of 64 in France, Laura warns of a drastic revision of the UK pension by former pension minister Webb over here.

You can read Laura’s article here

She shudders when she thinks of people like me being a burden on her generation. I know what she means, a few years back, people like me would be dying , but this person is going to live a lot longer than I would have – not least due to surgery like the stuff I’ve just had.

I’ve just come out of a couple of days in a ward on men of whom I was the only non-pensioner. I told one I was involved in private pensions and he hadn’t got one, nor had the bloke in the bed on the other side of him.

For many older people, the state pension is the only pension. For all our talk of 8% or 12% as the auto-enrolment rate, for older people , the amount of pension they get is still linked to the amount they earned via a distant memory of SERPS and S2P.

Laura’s generation, Tom McPhail and Steve Webb’s generation and the generation in the short stay ward of Westmoreland hospital (UCH – thanks ) have different levels of reality. I suspect it’s not till you are 66 today , 67 shortly that state pension is that real.

What can we afford?

What Steve is actually saying is much more complicated than Laura’s thinking or mine for that matter (what will we get) and comes back to what can we afford – not in 2025 but through 2050 till towards the next century (that’s what happens when Webb teams up with Stuart McDonald – two regular boffins).

LCP argue that the best way to put the State Pension funding on a firmer footing would be to set SPAs so that people could, on average, expect to receive a pension for a fixed period, such as twenty years. This means that as life expectancies improve, retirements will stay the same length, but working lives will gradually lengthen, thereby making the system more affordable.

However, if this approach were adopted, some people in parts of the country with low life expectancy could find that they only received the State Pension for a few years, hitting them harder than those in longer-lived areas.

In response to this, LCP also proposes the radical idea of having a “guarantee period”, i.e. a minimum payout for State Pensions. This would mirror the way that private sector annuities work, with minimum “guarantee periods” being the norm.

Under the LCP proposal, anyone reaching State Pension Age would be guaranteed that they – or their estate – would receive five years’ worth of payments. This would not add greatly to the cost of the system (because most people who retire draw a pension for at least five years in any case) but would focus protection on the most deprived groups with the lowest life expectancy. This, in turn, would make it easier to justify a faster schedule of State Pension increases to make the system as a whole more sustainable.

As you go from France, through Britain today – to the Britain of tomorrow, the emphasis changes from what we can get away with to what we can afford.

What Steve wants to get away from is pure social insurance where the bloke in the ward next to me (69 years old) told me that he didn’t expect to make five years a pensioner (he has the big C). I could see the sadness on his face, he had no wife.

Here are Stuart and Steve’s suggestions, they do not suppose we will pay less in future years, just more in a rather more focussed way.

You can download this report here