The SPP response further explains that, “changing the SPA addresses the affordability of the State Pension but does not tackle wider concerns about retirement adequacy, the savings gap, or broader questions of fairness.”
The SPP goes on to state that whilst the SPA is a key determinant of the cost of the State Pension, relying solely on this lever would imply the SPA increasing to 75 or beyond in the coming decades, which “…would present significant political and social difficulties and would fundamentally alter retirement expectations.” The SPP suggest that a more practical role for the SPA would instead be as part of a balanced package of reforms.
In relation to the idea of an automatic adjustment mechanism (AAM), SPP recognises this would provide for the “predictable and automatic implementation of any necessary changes to the SPA without having to seek political consent” but they warn, “…its existence does not eliminate political risk since there will inevitably be pressure to cancel or adjust the automatic change from affected groups.”
Finally, the SPP suggests that policymakers should consider the issue of “fairness” when considering the factors driving changes to the SPA, particularly when different factors multiply the impact within a single group, stating, “…there will be groups which leave the labour market earlier than average, have a lower life expectancy and a lower healthy life expectancy. By almost any measure of fairness they would lose out.”
Shayala McRae, Chair of the SPP Legislation Committee, said: “Reviewing the State Pension Age may appear to be a relatively straightforward decision but in truth it is a complex challenge that has far reaching implications for British society – political, social and of course, economic. Although the SPP believes the terms of reference for this review were unnecessarily narrow, we have sought to highlight a range of issues for consideration that we trust prove useful in helping the government to reach the best possible decision.”
Government review of State Pension Age consultation
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