Academics comment on lack of pension measures in Autumn Statement
In today’s Autumn Statement, the Chancellor Philip Hammond said the ‘pensions issue would be addressed in the next parliament’. Two Cass experts explain why they think this needs to be addressed now.
Professor David Blake, Director, Pensions Institute, Cass Business School said:
“Once again, with the serious pension problems that this country is facing, the can is being kicked further and further down the road. The triple lock on the state pension is unsustainable – everybody knows that – yet the government is keeping it until the next parliament.”
Professor Blake said the government should bring forward increases in the state pension age and should also announce that the contribution rate for auto-enrolment should be raised to 15 per cent.
“All this is doing is passing an increasing burden onto the next generation – and this can only lead to increasing resentment,” Professor Blake said.
Professor Les Mayhew, Professor of Statistics, Cass Business School said:
“Legislatively speaking The Pensions Act 2014 requires the State Pension age to be reviewed during each Parliament. The reviews will consider changes in life expectancy and wider changes in society. The first of these reviews is currently underway, conducted by John Cridland, and will conclude in May 2017. That review is forward looking and will not re-examine the existing timetable for increases up to April 2028. So it is not in the gift of the Chancellor to announce the result before the review has been done,
“However, it is important that the review does not postpone the inevitable - the demographics show that it needs to be 70 years or thereabouts. However, the existing timetable will give them little time to make a further hike because of increases in state pension age to age 67 by 2028 which have already been announced. This leaves little time to make changes so if they do go for 70 it will more likely be in the early 2030s - which is a few year later than it should be, based on the economics,” said Professor Mayhew.
Professor Mayhew said Britain’s working age population had been underpinned by immigration for years and if one of the effects of Brexit is a shortage of workers, this will only add pressure on people to work for longer and for the pension age to increase.
“The danger is whether people will people will be physically fit enough to work to this age or may be otherwise engaged caring for a family member - many will not be and so find themselves stuck in a trap of being unable to work through physical disability or long term illness or other responsibilities with no money coming in (other than benefits). It will be interesting to see how the review addresses this.”