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Fear push-back in pension age would hit poorly workers

Many of today's youngsters will have no choice but to work longer and retire later.

That will be the inevitable upshot of this month's Autumn Statement, which revealed plans to place the state pension age under constant review amid curbs on government spending and predictions of rising life expectancy over the next four decades.

But just how many Scots will live long enough to see the benefit of their pension contributions? That is the question from SNP and Labour advisers who wonder whether Westminster's push-back on the state retirement age will cause workers in poor health to lose out.

This crucial turning point in our lives has already been raised to the age of 66 from 2020 and 67 from 2036, allowing the Treasury to snip £100 billion off the welfare budget in the next 23 years.

But a new principle underpinning future reviews of the state pension age will determine that workers must spend no more than one-third of their adult life getting this state handout.

The Office for National Statistics estimates that life expectancy will reach 83.4 years for men and 87 years for women by 2035.

So the warning came loud and clear from George Osborne: expect to see a new state pension age of 68 by the mid-2030s, 10 years earlier than previously proposed, with a further rise to 69 expected by the late 2040s.

That one-size-fits-all pension age has been branded "regressive and unfair" by one Labour peer. In a recent debate on the Pensions Bill, Baroness Patricia Hollis of Heigham said: "Every year that we raise the state pension age is deeply unfair on those who have had hard lives. They start work five years earlier than those who enjoy higher education, and they can expect 10 to 15 years less of overall life expectancy and of healthy life expectancy."

Her words were echoed by Roderick Campbell, the SNP MSP for North East Fife, who called the move to a state pension age of 67 "too rapid". He said: "With lower life expectancy in Scotland, the Chancellor will have more people working for longer, but being able to reclaim very little of their pension."

Mr Campbell pointed to the Scottish Government's blueprint for independence, which could pave the way for an autonomous commission on a tailored pension age.

Chris Leitch, head of employment at Tods Murray lawyers, said that raised an intriguing possibility. "If Scotland votes 'Yes' next year and the White Paper plans become a reality, Scotland could arguably be a more attractive place to be a pensioner than the rest of the UK."

Tom McPhail, head of pensions research at broker Hargreaves Lansdown, said: "Variable state pension ages based on occupation or region may make sense in theory but are absolutely unworkable in practice. What's to stop people moving house or changing jobs? The only other solution would be to individually underwrite all 800,000 people reaching retirement age every year."

He added: "This is an area of policy where the pensions industry has already addressed the problem - people in poor health who buy an annuity are eligible for higher pay-outs, whilst the healthier and longer lived do not enjoy such generous terms.

"The key policy change should be to encourage an effective process to help individuals shop around and get the best possible value from their defined contribution pension plan."

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