Out-Law / Your Daily Need-To-Know

First UK state pension age gets underway, but 'long-term policy' needed, says expert

03 Mar 2016, 9:50 am

Former Confederation of British Industry (CBI) director general John Cridland will lead the first independent review of the UK's state pension age (SPA), the government has announced.

The review panel will gather evidence on the SPA, on rising life expectancy and wider societal changes before making recommendations to the government, in time for it to decide whether any changes are needed by May 2017. As part of its work, the review panel has been asked to look at whether the current system of a universal SPA which rises in line with life expectancy is "optimal", according to the terms of reference of the review.

The SPA for women in the UK is due to rise from 60 to 65 to match that of men from 2018, before it increases to 66 for both sexes in October 2020 and to 67 by 2028 under the current timetable. The 2014 Pensions Act provides for an independent review of the "sustainability" of the SPA to take place at least once every six years.

Pensions expert Robin Ellison of Pinsent Masons, the law firm behind Out-Law.com, welcomed the appointment. However, he said that the government had missed an opportunity to develop a "holistic" pensions strategy, of which regular reviews of the SPA would form part.

"We have had a battery of non-joined-up initiatives on pensions, ranging from annual changes to the tax structures to an excess of regulatory intervention on a weekly basis," he said. "It would have been better if we had had a statement of long-term pensions policy of which this might have been part."

"This is a sensible government initiative and one which was almost inevitable, and that which is to be conducted by someone with widely recognised integrity and credibility," he said.

The SPA review is to be "forward looking and focussed on the longer term", and will not address the existing SPA timetable to April 2028, according to the terms of reference. It will consider what a suitable SPA is, both in "the immediate future and over the longer term"; and whether the current system is affordable in the long term, fair to "current and future" generations of pensioners and supportive of a 'fuller working lives' objective.

The panel intends to draw from the views and experiences of individuals, charities, businesses and research groups as part of the review process.

Pensions minister Baroness Ros Altmann said that it was "only right" that the government continued to review state pension ages, in order to "make sure that the state pension is sustainable and affordable for future generations".