Increasing the state pension age to 75 would improve the wellbeing of older workers and boost the UK economy by £182bn, a think tank has said. But experts have raised concerns that such a dramatic increase in pension age would have negative consequences
In a report, the Centre for Social Justice (CSJ) has called for the increase in pension age to be accelerated, arguing that it no longer reflects a healthy working life expectancy and that not enough is being done to keep older people in work for longer.
The state pension age is due to reach 66 for men and women by October 2020, and set to increase to 68 between 2037 and 2039; however, the CSJ has said it should reach 70 by 2028 and 75 by 2035.
It also suggests that getting more 55 to 64-year-olds into work would see a reduction in out-of-work benefits, and could help boost the GDP by around 9 per cent – which equates to £182bn – easing the strain on future taxpayers.
- Employers may have to cut benefits to fund pensions, experts warn
- One third of over-55s will work part-time in retirement to make ends meet
- Majority of employees now participating in a workplace pension
Andy Cook, chief executive of the CSJ, said: “All generations deserve to be supported in their choices and the current lack of support for older members of the UK workforce is both socially inexcusable and economically short sighted.
“By increasing the state pension age, we can help people stay in gainful and life-enhancing employment while also making a sound long-term financial decision.”
The suggestion is part of a string of proposals aimed at keeping older workers in employment longer, including enhancing healthcare support through improvements to occupational healthcare, mental health first aid training and increased utilisation of the government's mid-life MOT scheme.
However, the implications of such a large change is causing doubt among experts, who fear the overhaul could cause “huge issues” for retirees and older workers.
Helen Morrissey, pensions specialist at Royal London, said the CSJ’s proposals would save money but warned that many retirees will not have been given adequate time to prepare.
“We need to give careful thought to what kind of jobs people in their 70s are able to do, and while some people will be able to work on for longer others simply won’t be able to,” said Morrissey.
“If people feel forced to remain in work for longer, they may find themselves in jobs they are unable or unwilling to do, which causes real issues for employers that will need to take action to remove these people from their roles.
“There are further concerns that having large numbers of older people in the workforce means there are less opportunities for younger people to progress. The government needs to think carefully before taking such drastic action.”
Dr Anna Dixon, chief executive of the Centre for Ageing Better, said that seizing the economic opportunity of an ageing population means employers must improve support for older workers, but that raising the state pension age wasn’t the answer. She said: “Raising the state pension age will not address the stark inequalities in how healthy we are or how long we live, nor will it help the government to balance its books.
“For people who’ve had a lifetime of low income or who find it difficult to keep working because of ill health or disability, the state pension is a vital safety net to prevent poverty in later life.
“And if the state pension age goes up, a larger proportion of people are likely to transfer to working-age sickness and disability benefits, unless support is put in place. The government should create greater flexibility in the benefits system to support these people.”
The CSJ report highlighted that, provided the proper support was in place, raising the age to 75 would increase retirement savings and ensure the full functioning of public services for all.
The report concluded: “While this might seem contrary to a long-standing compassionate attitude to an older generation that have paid their way in the world and deserve to be looked after, we do not believe it should be.”