State pension age should not be increased says PLSA

The Pensions and Lifetime Savings Association (PLSA) has revealed it does not wish to see the state pension age lifted any higher as this would disadvantage demographics with lower than average life expectancies.

Following the Independent Review of the State Pension Age, overseen by John Cridland, former director-general of the Confederation of British Industry (CBI), the PLSA reiterated that the UK will soon have the highest state pension age of any OECD nation at 68.

The PLSA says that by increasing the State Pension Age further it would negatively impact on those with lower than average life expectancies who would receive little, if any, state pension. In addition, those with lower than average life expectancies may also struggle to stay in work beyond the State Pension Age.

According to Graham Vidler, external affairs director, PLSA, the state pension triple lock, which guarantees that state pensions increase by whichever is highest out of average earnings, the Consumer Price Index (CPI) or 2.5 per cent, should be phased out in favour of indexation in line with earnings; ensuring the state pension maintains its current value of around 30 per cent of average earnings.

“A state pension maintained at 30 per cent of average earnings can provide a strong basis for future retirement incomes,” said Vidler.

“Removing the triple lock can keep it affordable without the need to increase state pension age still further to the detriment of people with poorer health.

“We also believe that proposals for a variable pension age, while attractive in tackling socio-economic differences, would sacrifice the simplicity and clarity of the current system.

“On balance, we support the current system of a single state pension age for all.”

The PLSA adds that the impact of increasing the State Pension Age further would also be negative on certain pension schemes – particularly those with defined benefit schemes.

Tens of thousands of small business owners across the country are reaching their staging dates to automatically enrol their staff in pension schemes to help more people save for the future.

TaxAssist Accountants works with Wren Sterling, a national firm of independent financial advisers, who can discuss a pension scheme with you. Please contact us today on 0800 0523 555 or drop us a line using our online enquiry form and our accountants will be able to provide you with more details.

Date published 9 Jan 2017 | Last updated 9 Jan 2017