Commissioner’s Blog: Bringing forward increases in the State Pension Age would be unjust
Recent reports have suggested that the State Pension Age may be increasing to 68 sooner than expected – potentially in the mid-2030s, rather than the mid-2040s as currently planned.
An announcement could be made as early as March, as part of the upcoming UK Government’s budget, following the Second Review of the State Pension Age, which was undertaken last year. You can read my response to the review here.
The current State Pension Age is already higher than healthy life expectancy, meaning that, for many, the years running up to getting the State Pension are a struggle. This is compounded by persistent ageism in employment which reduces the chances of getting or keeping a good job in our 50s and 60s, whilst many of us will also be juggling caring for loved ones.
The changes already underway, together with the six-year review cycle, were introduced in response to projected improvements in life expectancy and importantly healthy life expectancy. However, life expectancy and healthy life expectancy have not improved at the rates that were previously expected: since 2011, improvements in life expectancy have stalled and, for certain groups of the population – such as women living in deprived areas – have actually gone backwards.
One of the core principles set out when establishing these reviews (in the Chancellor’s Autumn Statement in 2013) was that the State Pension Age should increase with life expectancy so that people spend, on average, ‘up to one third’ of their adult lives in receipt of State Pension.
But given that life expectancy has not improved as anticipated, the case for making further changes to the State Pension Age at this time based on this rationale is weak.
Furthermore, life expectancy itself is not a good measure of people’s ability to work for longer, which means there needs to be a greater focus on healthy life expectancy when making decisions relating to State Pension Age.
Here in Wales, for example, average life expectancy for men is 78.3 years, but healthy life expectancy is only 61.4, while for women these figures are 82.3 and 62 respectively – a difference of over 20 years. In deprived areas, healthy life expectancy is even lower: dropping to around 59.4 in Blaenau Gwent, for example.
In addition, data from the National Survey for Wales indicates that over two-thirds of people aged 65+ live with one longstanding illness, while around a third live with two or more longstanding illnesses – mainly musculoskeletal, heart or circulatory complaints, which can often be serious conditions.
Without action to improve people’s health and healthy life expectancy significantly, many people will simply be unable to work for longer, while others might put themselves at risk by continuing to work despite being in poor health, something that could potentially create other unforeseen costs due to an increased need for health and social care services.
For older people who are able to continue working, ageism and age discrimination continue to create barriers in the labour market and prevent older people from remaining in or returning to employment. Age remains the most common reason for work-related discrimination according to the OECD, which can manifest itself in a variety of ways.
For example, despite 90% of older people believing they have transferable skills to move roles or industry if they were offered training, only 35% of employers surveyed would be prepared to hire and offer training to someone over 55 in a new industry.
Assumptions and stereotypes about older workers are common, which means that older people are more likely to be made redundant and often find it more difficult to find work following a job loss or redundancy, or that opportunities for training and development – crucial to support people to remain in employment – can be limited. Furthermore, factors such as a lack of flexibility can indirectly discriminate against older people, particularly those with caring responsibilities, and act as barriers to older people remaining in or seeking employment.
Until these issues are tackled, many people will find it difficult or impossible to remain in or find employment as they reach their late 60s and may be at risk of financial hardship or falling into poverty as they approach State Pension Age.
Rather than making further changes to the State Pension Age at this stage, the focus should be on tackling health inequalities and ending the ageism and age discrimination that restricts work and employment opportunities for so many older people. This would not only increase productivity and boost the economy, but would also, more importantly, offer a period of stability to allow people to recover financially and offer more time for people to plan for their retirement.
Given the circumstances we currently find ourselves in – as we deal with the aftermath of the pandemic and face the ongoing impact of the cost-of-living crisis – it is in the best interests of everyone, not only those who would be directly affected by the changes, but also those in generations to come.