Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, considers the future of the State Pension Triple Lock in the light of the questioning of independent reviewer of state pension age, John Cridland, and government actuary Martin Clarke by the The Work and Pensions Committee on 22 February.
The state pension age conundrum was well summarised by John Cridland, who said: “people want their pension, but they need to live long enough to receive it.”
It’s a tricky balancing act – we are living longer but increases are slowing but as government actuary Martin Clarke said there’s no getting away from the fact we have a large cohort of older people either receiving state pension or who soon will be. The costs are enormous and growing.
Accelerating state pension age may seem like the logical next step but we need to remember not everyone can continue working into their 60s for health reasons and we can’t forget there remain large parts of the population who will not live long enough to draw a state pension for any considerable length of time. There are huge disparities in life expectancy up and down the country and even at city level that cannot be ignored.
This brings the existence of the much-debated triple lock into question – in Cridland’s review of state pension age in 2017, he said there would come a point where the triple lock had done its job in raising state pension but that its continued existence would become unfair on younger taxpayers and force further increases in state pension age– has this tipping point been reached?
It’s also important to say state pension and the age at which it is set is not the whole issue. It’s all part of a much larger conversation, not just of state pension, but of how we help older workers to remain engaged in the workforce. People often can’t do the same jobs in their 70s as they did in their 50s but that doesn’t mean there shouldn’t be a role for them.
Similarly, people shouldn’t be forced out of the workforce because they have caring responsibilities. By exiting the workforce employers are missing out on enormous experience that could be used to mentor younger workers and pass information on, whereas redesigning roles and allowing more flexibility could keep this experience in the workforce.
It’s an enormous shift for employers, which Cridland compared to having to consider policies around maternity and paternity leave and pay, and it’s one that should be grasped sooner rather than later.
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