These days the law requires that the state pension age (SPA) is reviewed every parliament. John Cridland has recently been appointed to undertake such a review.
Unfortunately, changing SPAs is a tricky business for three reasons.
Firstly, and not unreasonably, many people confuse SPA with retirement age. The two aren't necessarily the same – one is the age at which state retirement benefits can be accessed, the other is the age an individual determines they will retire at – although in practice for many, whose only source of retirement income is the state, they are. Add to this that for the last thirty years we've all been conditioned by the combined marketing might of the commercial pensions industry to see retirement as a long holiday (I wrote this blog some time ago on the purpose of retirement). As a consequence of both, increasing the SPA is perceived as taking something away, part of the long holiday, and people don't like to lose what they perceive to be theirs by right. In other words, it is very emotive.
Click here for the government SPA calculator.
Secondly, SPA is a very blunt instrument. Since 2013, SPA has been linked to average life expectancy. As we live longer, we are expected to work longer. Fair enough. Except, of course, average life expectancy is, well, an average. There are parts of the U.K. that have a very different life expectancy from other parts of the U.K. There are jobs that result in a very different life expectancy compared to other jobs. Earnings levels have an influence on life expectancy, and there are dozens of other factors. Any change in SPA will have a disproportionate impact on certain sections of the population – unless we introduce a much more complex structure.
Thirdly, state pensions are themselves very blunt instruments. The amount of income needed in retirement varies according to all sorts of factors. One of the most significant of these is health. A long healthy retirement requires a different income pattern from a long retirement in poor health. SPA considers life expectancy, but not healthy life expectancy. In addition to the above there are a host of other complexities and vested interests. John Cridland certainly has his work cut out.