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Should new life expectancy data affect State Pension Age increases?


If you are covering findings from University College London expert, Sir Michael Marmot, that life expectancy have almost “ground to a halt”, please find comment from Jon Greer, head of retirement policy at Old Mutual Wealth, on what the findings mean for planned State Pension Age increases:

Jon Greer“The data from University College London, showing that the rate of increase in life expectancy has slowed, will inevitably lead to questions around the pace of State Pension Age increases.

“But it would be dangerous to treat this report as an excuse to avoid tackling the long-term sustainability of the state pension. The state pension age remained largely unchanged for decades while life expectancy has increased rapidly. The proposed increases are really an example of the state pension age playing catch up with life expectancy.

In addition, demographic changes mean that a growing proportion of the population will be retirees relying on their working-age peers to sustain state pension benefits, thereby increasing the cost for taxpayers.  

“The government has also backed itself into a corner when they dodged a big decision by pledging to retain the triple-lock as part of the deal with the DUP.

“The need to maintain the triple lock – which guarantees the state pension rises by average earnings, the consumer price index, or 2.5 per cent, whichever is the highest – means they will need to press ahead with increases to the state pension age to stop state pension costs spiralling out of control.

“The state pension age is due to rise to 67 by 2028 and 68 by 2046, but the government may need to go further. Both John Cridland and the Government's Actuary Department have recommended that they speed up increases in the State Pension Age, with the former proposing the state pension age should rise from 67 to 68 between 2037 and 2039. These proposed increases cannot be dismissed out of hand.

“The Commons Work and Pensions Committee have warned previously that maintaining the pensions triple lock may mean having to push the state pension age above the average life expectancy for men in poorer parts of the country.

“With increasing calls on the government to relax the purse strings, in particular with regard to public sector pay caps, the pressure to accelerate planned increases in the state pension age may also be seen as a way of balancing the books.

“Any announcements on the State Pension Age need to be considered in tandem with the Conservatives manifesto promise to have a clear and sustainable plan to tackle the social care crisis.”

For more information contact

Tim Skelton-SmithOld Mutual Wealth02380 916 99807824 145
Michael GlenisterOld Mutual Wealth020 7778 963807469
Kathleen GallagherOld Mutual Wealth023 8072 629307990

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £118.1 billion in customer investments (as at 30 September 2018).

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The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

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• Intrinsic to Quilter Financial Planning

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• The UK Platform to Quilter Wealth Solutions

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