State pension age rise to 70 & early access from 65
That’s the proposal from Lord Turner, former chairman of the Pensions Commission, who is calling for current rises in the state pension age to accelerate.
Under current plans, the state pension age will rise to 68 by 2030.
If Lord Turner’s proposals are adopted, it would rise by an additional two years.
This might not sound like good news for pensioners retiring in the future, but the proposals also feature a plan to pay a more generous state pension income.
Adair Turner’s proposals for the state pension include staggering payments, so the state pension income is means tested from age 65 onwards, for those with lower incomes or manual jobs having an impact on their health and life expectancy.
Lord Turner shared this proposals in a speech to clients of Kleinwort Benson, saying:
“I would make the state pension more generous at 70 and, in addition, I would introduce forms of state pension or means-tested benefit, which would be available for lower-income people who’ve retired from 65 or 66 onwards.”
He added that politicians have failed in the past to think creatively when it comes to the state pension.
So is this a good idea?
Steven Cameron, pensions director at Ageon, thinks creativity around state pensions is an idea worth supporting:
“We support Lord Turner’s call for creativity around how and when individuals in future can access their state pension.
“However, as the default state pension age continues to rise, it becomes increasingly necessary to find solutions for those who are simply unable to work to advanced ages.
“The state pension age is already scheduled to increase and further extending those increases without decades of notice would be extremely challenging for politicians and pensioners alike.
The WASPI (Women Against State Pension Inequality) campaign is a stark reminder of the issues that can be created.”
Cameron went on to suggest everyone should be offered the option of drawing their state pension earlier than the default age, with a reduction applied to their state pension income to make this option cost neutral for the taxpayer.
He would not propose limiting this option of early state pension income to manual workers or those with lower incomes, because the challenges of working in later life can exist across all employments and income levels.
With pension freedoms introduced in April last year, and the government appearing to be moving towards further pension reform with plans for a pension ISA in the future, extending more flexibility to the state pension seems like a logical next step.
As always with matters of state benefits in retirement, affordability is a key consideration.
Even cost neutral proposals for early access like those described by Lord Turner would require bringing forward budgets to release funding, and this could become increasingly difficult in light of an ageing population.[tweet_box]Should the state pension age rise to 70, with earlier access in return for a reduced income?[/tweet_box]