Longevity think tank Phoenix Insights, part of Phoenix Group, is today calling for the UK government to reinvest up to £1bn (€1.2bn) of the potential savings that will come about if it raises the state pension age again, to support those most negatively impacted by a rise.
The last rise in state pension age did not simply lead to everyone working for longer, it also led to increases in rates of poverty and unemployment in the UK among those impacted.
Phoenix Insights’ new report – Reaching a certain age: public attitudes to the state pension – reveals that people believe that the state pension is there to ensure everyone has a minimum level of income in retirement (87%) and to support older people who are unable to work (82%).
Fewer than one in 10 people (9%) believe that age should be the main factor determining when people stop working. Phoenix Insights warned that, without action, moving the goal posts again will leave many in a worse position.
The firm said there was a pressing need to prepare and support people through the expected transition to a later state pension age – especially those facing health issues, redundancy or caring responsibilities which can make it more difficult to work in the five years leading up to state pension age.
These groups are among those most likely to be negatively impacted.
Catherine Foot, director of Phoenix Insights, said: “Nearly half of the population rely on the state pension for the majority of their income later in life; to protect future generations of retirees from poverty, government needs to act now.
“Reinvesting just a fraction of the money saved by increasing the state pension age can help more people stay in work longer and support those for whom that is simply not feasible.”
She added: “Living longer is one of the greatest gifts of the 21st century, but it’s one the UK really needs to plan for.”
Based on its findings, Phoenix Insights recommends a package of support measures that includes:
- an engagement campaign to target those that will be affected first by any change;
- greater investment in tailored job support and preventative workplace health programmes, and support for working carers for people during the five years before the new state pension age;
- a programme of support from mid-life onwards, including age-inclusive campaigns, access to lifelong learning and preventative health at work programmes.
The last state pension age rise enabled approximately £4.9bn of savings. Assuming a similar saving would be made by the next increase, a reinvestment of 10-20%, or £500m-£1bn, would still enable a net gain for the Exchequer of 80-90%, or £3.9bn-£4.4bn, in savings.