Should the state pension age be raised to 75?
Changing retirement age would create £182bn windfall says influential centre-right think tank
Raising the pension age to 75 would slash the cost of out-of-work benefits and boost the economy by £182bn, a report from the influential Centre for Social Justice (CSJ) think tank has claimed.
Despite average life expectancy rising from around 50 to 80 over the past century, the pension age has remained relatively unchanged - although the government has been gradually raising it since April 2010.
Half of UK adults will be over 50 by the mid-2030s, which coupled with rising life expectancy means taxpayers face escalating costs unless people stay in work for longer, according to what the Daily Mirror describes as “Boris Johnson’s favourite think tank”.
The pension age is already set to increase to 67 by 2028 and to 68 by 2046 – but the research group (co-founded by former Conservative leader and work and pensions secretary Iain Duncan-Smith, who was behind the idea of Universal Credit) wants to see a faster increase.
The pensions bill has ballooned from £17bn in 1989 to £92bn now, making up £4 of every £10 of welfare spending. By 2023 it will cost £20bn more as the population ages and the birth rate falls.
To limit the cost to the state of this “major demographic shift”, the report calls for the state pension age to be accelerated to 70 by 2028 and then 75 by 2035.
Getting more people aged 55 to 64 into work would slash the costs of out-of-work benefits but also help boost GDP by around 9%, equating to £182bn, it claimed.
To achieve this goal, the think tank recommends helping older people “access the benefits of work” by giving support to them and employers, such as increased access to flexible working and training opportunities.
The Daily Express says “biased employment practices are blamed for preventing more than a million older people getting a job, with more than half of all adults out of work in the year before they reach state pension age”.
CSJ chief executive Andy Cook said: “Right now, we are not doing enough to help older people stay in work and the state pension age doesn’t even closely reflect healthy working life expectancy.
“By increasing the state pension age, we can help people stay in gainful and life-enhancing employment while also making a sound long-term financial decision.”
However, the Mirror reports that “welfare campaigners are appalled by the report and point out that with workplace pensions often unaffordable, three-quarters of Britain’s elderly will rely entirely on their state payments by 2036”.
Caroline Abrahams, Age UK director, said more support was needed for older workers but the state pension age should not be raised.
She said there were hundreds of thousands of people in their 50s and 60s in “dire financial straits” as they couldn’t work but still had years to go before getting their state pension. Raising the threshold would simply pull many more older people into that situation.
Former Tory pensions minister Ros Altmann said the proposed changes “must not be allowed to happen”, tweeting: “Reports of state pension age rising to 75 are shocking. Major changes in pension attitudes required due to big life expectancy differentials. Using age as a strict cut off is not good policy.”
Jan Shortt of the National Pensioners Convention added: “The longer you work the more ill you become and the less likely you are to even reach retirement age.”