The Centre for Social Justice is calling for the state pension age to be raised to 70 by 2028 and to 75 by 2035, a much faster rise than currently planned.
Former work and pensions secretary Iain Duncan Smith’s think-tank has proposed the acceleration would be aided by “improvements to workplace support and healthcare” for older employees.
The government’s current legal schedule anticipates the state pension age rising to 67 by 2028, and then to 68 between 2044 and 2046, although law is expected to be enacted to make the latter happen by 2039.
The report – published yesterday (18 August) – suggests that without increasing opportunities for older workers, individuals, businesses and the economy will suffer.
It also suggests raising the state pension age to 75 could boost the UK gross domestic product by more than £180bn and increase the demand for goods and services as household incomes would be significantly higher.
Additionally the paper argues the mid-life MOT, suggested by John Cridland in his independent review of the state pension age, “currently fails to be a holistic tool and is ill-suited to initiate a meaningful conversation between employers and employees”.
It recommends employee-tailored, holistic mid-life MOTs should be implemented by employers to discuss wealth, work and health. The report notes this should include discussion about opportunities for flexibility, workplace adjustments and training opportunities.
Rather than being understood as retirement support, this structure should be “conceptualised as a support tool” for older workers to enable those that want to, to continue work.
A number of providers, including Aviva and Legal & General, have rolled out mid-life MOTs, while the government has launched a website dedicated to the idea. However, a House of Lords committee has also said “a good deal more thought” is needed as the schemes are in danger of “missing those most in need of support”.
Royal London pensions specialist Helen Morrissey said: “While such proposals will undoubtedly save money, raising the state pension age so quickly will cause huge issues for many retirees who 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. These people will face severe financial hardship if they have not saved enough into a pension to cover the years between leaving work and claiming state pension. The government needs to think carefully before taking such drastic action.”
Prolonging working life could also boost savings for those in part-time work or in the gig economy, the think-tank said. It also suggests workers could transition from full-time to part-time work over a longer period of time in order to balance caring responsibilities or manage a health condition.