The age at which people receive their state pension should increase and the government’s “triple lock” should be withdrawn, an independent report has recommended.
The review, authored by John Cridland, calls on the government to increase the state pension age to 68 over a two-year period between 2037 and 2039. This is faster than the current timetable.
The state pension age is set to rise to 66 in 2020 and then to 67 at some point between 2026 and 2028. Under the current timetable it is expected to rise again to 68 between 2044 and 2046, much later than Cridland’s recommendation.
The proposal means people in their mid-40s today would expect to retire at age 68, those in their mid-30s should expect retirement aged 69, and people in their mid-20s would retire at 70.
The report also recommends that the expensive “triple lock” is scrapped entirely as it believes it’s too expensive to continue with. The lock currently guarantees pension payments rise in line with either average wages, inflation or 2.5% - whichever is highest.
‘No help for people to get their state pension earlier’
But experts have raised concerns that increasing the state pension age may not be fair for people who work manual jobs or are expected to live shorter lives.
Steven Cameron, pensions director at Aegon, says these people and other consumers should be able to draw down their pension sooner depending on their circumstances.
“Requiring everyone to wait until an ever increasing age to draw a state pension is inflexible and increasingly outdated compared to today’s more flexible and personalised transition into retirement,” he says.
“This is a missed opportunity to meet the needs of those who through health concerns, job pressures or lack of employment opportunity simply can’t keep working into their late 60s. We call on the government to keep the door open to future change.”
Former pensions minister, Ros Altmann, says: “If someone can work beyond state pension age, they can get a much larger pension but there is no help for people to get their state pension earlier if, for example, they started work exceptionally young, perhaps in tough industrial jobs, and genuinely cannot keep going till nearly 70.”
However, she adds: “I agree with Mr Cridland that the triple lock should be abandoned after 2020. The triple lock is a political construct which purports to offer great protection while increasingly disadvantaging the oldest and poorest pensioners.
"The lock protects around £160 a week for the newest pensioners but only around £120 a week for older ones and it does not protect the Pension Credit at all which the poorest pensioners must rely on. The arbitrary 2.5% figure has no economic or social rationale.”