Treasury must reinvest up to £1bn of potential savings from the next state pension age rise to help people adversely affected, says think tank Phoenix Insights
Longevity think tank Phoenix Insights, part of Phoenix Group, is today calling for the Government to reinvest up to £1billion of the potential savings that will come about if it raises the state pension age again, to support those most negatively impacted by a rise. The last rise in state pension age did not simply lead to everyone working for longer, it also led to increases in rates of poverty and unemployment among those impacted.
Phoenix Insights’ new report, Reaching a certain age: Public attitudes to the state pension, reveals that people believe that the state pension is there to ensure everyone has a minimum level of income in retirement (87%) and to support older people who are unable to work (82%). Fewer than one in ten people (9%) believe that your age should be the main factor determining when you stop working. Phoenix Insights warns that, without action, moving the goal posts again will leave many in a worse position.
The longevity think tank highlights the pressing need to prepare and support people through the expected transition to a later state pension age – especially those facing health issues, redundancy or caring responsibilities which can make it more difficult to work in the five years leading up to state pension age. These groups are among those most likely to be negatively impacted.
Catherine Foot, Director of Phoenix Insights, says:
“Nearly half of the population rely on the state pension for the majority of their income later in life2; to protect future generations of retirees from poverty, Government needs to act now. Reinvesting just a fraction of the money saved by increasing the state pension age can help more people stay in work longer and support those for whom that is simply not feasible.”
“We know people worry that health issues, caring responsibilities and having the right skills will prevent them from working for longer – so it’s clear that raising the state pension age without a plan to help people earn or save more is a recipe for disaster. Living longer is one of the greatest gifts of the 21st century, but it’s one the UK really needs to plan for.”
Based on its findings, Phoenix Insights recommends a package of support measures that includes:
- An engagement campaign to target those who will be affected first by any change
- Greater investment in tailored job support and preventative workplace health programmes, and support for working carers for people during the five years before the new state pension age
- A programme of support from mid-life onwards, including mid-life MOTs, age-inclusive campaigns, access to lifelong learning and preventative health at work programmes.
The last state pension age rise enabled approximately £4.9bn of savings. Assuming a similar saving would be made by the next increase, a reinvestment of 10-20%, or £0.5bn-£1bn, would still enable a net gain for the Exchequer of 80-90%, or £3.9bn-£4.4bn, in savings.
Elsewhere in the report, it details how despite 84% of people believing that providing the State Pension is an essential role for government, one in three (34%) think that there probably won’t be a State Pension by the time they retire, including half of 18-24s (49%) and over half of 25-49 year olds (53%).
Phoenix Insights was set up in 2021 by the UK’s largest long-term savings and retirement business Phoenix Group, with a mission to address the possibilities and challenges that come from longer lives. As well as calling for direct support to cushion the impact on individuals most impacted by a state pension age rise, it is asking for public funding to be directed towards supporting opportunities for better, longer and healthier working lives for all ages.
The report also shows:
- The public’s considers health (65%), individual circumstances (64%) and ability to do the job (61%) factors that should determine when a person stops working
- 76% of people support the idea of early access to the state pension for people who are unable to continue to work, for example due to health reasons
- 69% of people believe that the Government should ‘top-up’ the incomes of low-income pensioners, to make sure that they have a reasonable standard of living
- Conservative voters (61%) were more likely than Labour voters (56%) to agree that with people living longer, we should be prepared to pay more taxes to properly fund state pensions.
The full report and recommendations can be found here.