State Pension Age: Cridland identifies the challenges but the way forward remains unclear
John Cridland, one suspects, has probably spent much of the summer in a darkened room with a cold flannel over his eyes.
The former boss of the employer’s group the CBI has produced, under the auspices of his Independent Review of State Pension Age, a useful and sophisticated account of the many challenges and complications of pensions policy. What he doesn’t give is a hint of the way through.
The interim report of the review published today raises issues that should rank highly in the thinking of ministers who make the final decision on the State Pension Age (SPA).
- Cridland highlights that inequalities in life expectancy and healthy life expectancy are as much within local areas as between them.
- He notes the reliance of groups such as the self-employed on the State Pension as their personal savings rates fall.
- He explores the challenges facing carers with broken work histories in trying to build private pension savings.
- The importance of the Triple Lock on State Pension increases for the incomes of disadvantaged groups, is also noted.
But what does the report tell us about Cridland’s likely recommendations?
Well, pretty much nothing. Cridland’s central task is to recommend the direction of State Pension age after 2028. He makes much of rises in longevity in recent decades. But he also notes that UK will have the highest state pension age of all OECD countries by 2060 if it sticks to current SPA timetable.
Likewise, interesting ideas are raised about the structure of State Pension Age, but no solutions offered to the challenges in implementing them.
- Cridland says some have suggested greater flexibility to take benefits early for manual workers or those that start work at 16. But this will face the challenge of definition (is the boss of Barratt a builder?) and does nothing to help the burnt-out teacher.
- He mentions that perhaps some people should be able to take a reduced pension earlier. This, though, meets a challenge of how you avoid simply locking poor people into poor pensions for longer.
- He also mentions enhanced benefits for those approaching SPA, for whom the working age benefits system may be inappropriate. But he doesn’t set out how an administration hitherto more concerned with cutting benefits can be converted.
Notably, Cridland highlights how interlinked State and occupational pensions are. Sometimes this is (as with many public service pensions) the linking of State Pension Age and Normal Retirement Age. Sometimes it is in the ability of people to build private provision.
Implicitly, he blows out of the water the tacit policy of recent years that private pensions are just like any other savings product. The living standards of older people are an issue of public policy.
It is hard to understand why we have Cridland’s review tackling SPA and a separate review into automatic enrolment into workplace pensions also in the pipeline. Both will (or should) be considering the impact of policy on providing people with adequate incomes in old age. The TUC and others have long argued for an independent commission to consider these issues in the round – and build consensus about the way forward.
As far as the TUC is concerned the case has not been made for an increase in SPA. As set out in our submission to Cridland, we continue to seek improvements that allow those older people who want to keep on working to do so. And a State Pension that allows a decent standard of living for those who want or need to retire.
Cridland’s final report is due in the New Year. He can expect to spend Christmas with a cold towel pressed to his brow.