UK increases pension age ahead of schedule, confirms NEST
UK - The government today announced its intention to go ahead with the foundation of the National Employment Savings Trust (NEST), as well as plans to increase the retirement age to 66 ahead of schedule.
The changes to the state pension age mean both men and women will see the minimum retirement age rise by 2020.
Original proposals made by the previous Labour government included two separate tracks for men and women, while new proposals mean the state pension age will increase from 65 to 66 between 2018 and 2020, six years earlier than at first proposed.
Additionally, the main Comprehensive Spending Review (CSR) seemed to confirm the government's intention to launch the National Employment Savings Trust (NEST) on schedule, alongside auto-enrolment.
It said the settlement reached between the Treasury and the Department for Work and Pensions included "funding for the introduction of auto enrolment from 2012" and the "establishment of the National Employment Savings Trust".
The news comes less than two weeks after pensions minister Steve Webb refused to confirm the government's commitment to NEST.
With the CSR, part of a wide-ranging assessment on how to reduce the UK's deficit over the next four years, chancellor George Osborne also said he accepted Lord Hutton's recent findings as part of his review of the public sector pensions.
Osborne said: "The government will commit to continue with a form of defined benefit pension and seek progressive changes to the level of employee contributions that will deliver an additional £1.8bn of savings a year by 2014-15."
Joanne Segars, chief executive of the National Association of Pension Funds, said the review was "difficult but bold", adding that any changes to the state pension age must be done with sufficient advance notice to allow future pensioners to adapt.
"The trade-off for a later retirement must be a better state pension, particularly as the UK's is the worst in Europe," she said.
Deborah Cooper, a partner at Mercer, concurred that the increase was a sensible response to increasing longevity.
She said that while the changes would affect women and those of lower incomes most, it was the pragmatic decision.
The main CSR document also noted that any changes made to public sector pensions must not be led by a race to the bottom, which Segars argued would result in the worst possible pensions.
She said that while there was a "strong case" for higher staff contributions, these could only be introduced gradually to protect lower-paid staff.
On the establishment of NEST, she added she was pleased Osborne had confirmed its establishment, but added: "We await clarification on the scope of auto-enrolment, and the government must state its plans as soon as possible."