Labour will learn it can't balance the books on the backs of pensioners

Telegraph

22-07-2025

Here we go again. Another review of state pension age (SPA), heralding further increases in the starting age for the National Insurance (NI) pension safety net. Our state pension – one of the lowest in the developed world – is the social insurance retirement 'safety net', designed as a minimum amount that people too old to work will live on in retirement for the rest of their lives. The deal has always been that those paying into the insurance system all their lives will be supported when they need to stop working in the future.
Over the years, however, successive reforms have meant the system no longer seems to reflect those original social aims. Regardless of how long you have paid in, and whether or not you can genuinely keep working because of ill-health or caring duties, the Government expects you to just keep working longer before starting your state pension.
Currently 66, by 2028, SPA will be 67. Further increases to 68 are already planned. There are widespread worries that the demographic pressures of many more over-60s and fewer younger people will place unsupportable pressures on the public purse. This leads policymakers to conclude that rising the average life expectancy justifies expecting everyone to longer. But this ignores important elements of modern Britain.
Not everyone can manage to keep waiting longer for basic retirement support. Of course, people with other pensions, (including officials and politicians who make the policy decisions) will have money to tide them over for years until their state pension starts. But what about those who are not so fortunate? Many will be plunged into penury, trying to manage on meagre out-of-work benefits, despite having decades-long NI contribution records.
I believe average life expectancy is not an appropriate indicator of whether or not everyone can keep working longer. By definition, half the population will be below the average. Their circumstances shouldn't be ignored.
This new review's remit covers fairness between generations and state pension sustainability. So it must consider more factors than just starting age. It should include proper recognition of the enormous twenty-year differential in healthy life expectancy across the country. The worst-off groups are already in poor health before their sixties, but the best-off stay fit and healthy into their early-seventies. Since the pandemic and subsequent NHS dislocations, many older workers' health has worsened, making it vital to consider fairness within generations, not just worrying about younger versus older people.
Studies have shown that increasing SPA to 66 resulted in a significant rise in poverty among 65-year-olds. The least healthy are also less likely to have other income. Future pensioners are also facing lower pensions as traditional employer-guaranteed income is replaced, for private sector workers, by pension funds that are dependent on investment success and potentially vulnerable to tax raids.
Of course, continually jacking up SPA is a marvellous money-saving mechanism for any government. It's the easiest policy lever to pull to save money on pensioner support. However, there are other ways to cut state pension costs.
Currently, just 35 years of NI qualifies for a full state pension. This is nowhere near a full working life. People with health or caring issues, and a 50-year NI record, still cannot receive a penny of state pension before age 66.
Just forcing people to keep working longer, for less pension, is not sustainable. Ill-health early payments should be considered for people in poorer health, including heavy manual labour workers, with no private pension and decades-long NI records.
Providing early access to pension credit, or early retirement payments for carers and those in poorest health, would still save money, while also recognising those at the bottom of the health and wealth distribution in their sixties, who have so far been abandoned.