The John Cridland report has recommended that increases in the state pension age (SPA) should be accelerated and rise from 67 to 68 between 2037 and 2039.
Last year the government commissioned Cridland, former director general of the Confederation of British Industry, to review the SPA and look at the financial sustainability of the system after dramatic improvements in life expectancy.
Under current legislation, from December 2018 the SPA for men and women will increase to 66. It will then rise to 67 between 2026 and 2028 and to 68 between 2044 and 2046.
In his long-awaited report, which is expected but not guaranteed to be reflected in government policy, Cridland has recommended that rises to the state pension age should be sped up so it reaches 68 between 2037 and 2039 – seven years earlier than the government’s current plans.
As expected, Cridland disappointed reformers calling for a flexible state pension age by advocating a universal SPA that applied to all people. However he did say one year before state pension age there should be means-tested support available for people who are unable to work because they are ill or caring for someone, allowing them some early access to pension income.
As well as Cridland, the government also commissioned the Government Actuary’s Department (GAD) to look at the state pension age.
GAD was asked to investigate two scenarios, one where 32% of an adult’s working life is spent in retirement, and one where 33.3% is spent in retirement. Under the first assumption, the GAD said SPA should hit 69 between 2040 and 2042, while the second assumption would see the SPA reach 69 between 2053 and 2055.
Under the 32% scenario the GAD report said the SPA should then move from 69 to 70 between 2054 and 2056.
The other key recommendations in Cridland’s report were:
- the state pension should not increase by more than one year in a ten-year period;
- people should have access to a mid-life ‘MOT’ to help them plan;
- more flexibility in universal credit for those nearing SPA;
- anyone deferring their state pension to receive a lump sum once they start taking it, with the flexibility to drawdown that lump sum in stages if they are over SPA;
- scrap the ‘triple lock’ (which increases the state pension by the greater of 2.5% a year, inflation or average earnings) and cut forecast spending on the state pension to 5.9% from 6.7% of GDP by 2066;
- couples saving into an ‘auto-enrolled’ pension to have a joint pot of money to protect them if one is out of work;
- communicate changes to the state pension clearly.
Cridland said he wanted to balance having a sustainable state pension from a fiscal perspective and also one which sees ‘people living longer spend the same proportion of time in work and retirement’.
He acknowledged that increasing SPA would hit those most disadvantaged the worst.
‘In this review, I have sought to address how we can afford to live a longer pensionable life, how we can work longer, where this is necessary and possible. Where it is not, I have sought to continue to give assistance to those who need it,’ he said.