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State Pension Age 'must jump'

February 17th 2010

The recent projections released by the Office for National Statistics, show that the average male life expectancy post-retirement will reach 20.6 years by 2011. By the end of next year, the life expectancy for women will increase to 23 years after retirement.

Both of these figures contrast with the government’s original configurations which foresaw that pensioners would only enjoy these life expectancies after 2026. The political debate is about whether to bring forward the increase in state pension age to 2016 for men and 2020 for women. If the sole benchmark were the official life expectancy projections, a faster change could be on the cards.
 
The government intends that, immediately after each increase in the state pension age, men could expect to claim their state pensions for an average of just under 21 years and women for 23 years. Based on the latest projections, the state pension age would need to be increased to almost 66 overnight!.
 
Legislation introduced last year, which increased the amount of money given to pensioners, was supposed to let people know what they could expect from the state and when. The deteriorating fiscal position made it doubtful this settlement would last and the longer people live, the more expensive state pensions will be without further reforms.
 
Everyone knowsthat there is not enough money in the pot to sustain people living longer. Stakeholder pensions were just a damp squib. They were launched to solve the problem, but the take-up was extremely poor. The Government knew but the issue was a ‘hot potato’ The only way forward for UK pensions is through compulsion.
 
The state pension cannot be sustained forever and the population is ageing with people living longer and not putting enough in the pot. There are not enough people contributing, so what the public do not realise is that their national insurance payments are not being put aside for future benefit but are being used now.