State Pension Age to rise further

hugheskevi

I'm not sure why the timing of this was necessary?

The draft Pension Bill which is expected to receive Royal Assent in 2014 legislates for a regular review of State Pension age, the "first report must be published before 7 May 2017" [26(2) on page 25]. Reviews will take place subsequently, with a report being published no later than 6 years following the previous report.

The Government's intention is that "The review will seek to give individuals affected by changes to their State Pension age at least ten years’ notice."

The changes proposed for 2035 are over 20 years away. The only thing that is certain about the forecasts is that they will be imprecise. So if the policy ambition is to give individual's at least 10 years of certainty, why wouldn't these changes be made as part of the 2017 review when better data is available?

It seems highly likely that the 2017 review (or even the 2023 review) will lead to the current changes being amended, which leads back to the question of why make the changes now, when they are likely to be changed twice before they are implemented?

SnowMan

I'm actually quite impressed by this announcement, in particular the note on how the SPA review will be done numerically (before other factors are taken into account).

Before now it was all wishy washy. Saying SPA was going to increase in line with life expectancy improvements was meaningless because we didn't know the starting point from which the adjustment was to be made. The note provides a lot of clarity for geeks like me (although it won't be noticed by 99.9% of the population).

I agree the timing of the announcement seemed a bit odd. But I wonder if it was required for budget reasons. It is effectively saying the age 68 and 69 increases will happen sooner and perhaps that can now be incorporated into their budget deficit removal plan.

JezR

Yes I think this lays down the mechanics - and provides the earliest of warnings to those potentially to be affected. It doesn't however prescribe any change in itself.

115K

Freecall wrote: »

To put a slightly different perspective on things, I remember in the 1960's the debate was all about us living a life of leisure as technology would mean that we did not have to work so much.

There is no doubt that since then we have collectively become wealthier (at about 2% pa) by real changes in technology and human advancement. The question is what have we done with this wealth?

We could probably all have retired at 50 or worked a 4 day week or taken 10 weeks holiday a year.

For some reason however we are addicted to consumption so even with all the benefits of progress we work 60+ hour weeks, bring work home, take our computers on holiday and push our retirement ages backwards.

Part of being human I guess.

Sad but true.

margaretclare

atush wrote: »

As a former Epidemiologist, I disagree.

Statins, TPA, Stents, catheter balloons and other treatments. Just in the last 20 years had been amazing. Has reduced deaths hugely.

We'll have to agree to disagree with this one.

I've lived through most of these changes. There has also been a general rise in people's living standards.

There was what was called the 'golden cohort', those of us who grew up in wartime conditions. Rationing ensured enough food but not too much. Everyone got the basics. Children got extra milk and vitamins. Few sweets - they were rationed. Approx 110 grams of sweets a week. Everyone was much more active as a matter of course, cycling, walking just to get somewhere. Then, the introduction of the NHS. Gradually, better living conditions accepted as the norm. Bathrooms, home heating, insulation, all the things we accept now as a civilised standard of life.

Yes, smoking has declined. It's just over half a century since the first reports were published on the effects of smoking. If you look at any of the old films you see things that would make us shudder now. Lighting up in someone's face, having a conversation in a cloud of smoke...

Nowadays the big threat seems to be obesity.

SnowMan

One of the unusual features of the methodology of setting SPA is that it will depend, for any individual, as much on how mortality rates are projected to improve as much as how mortality rates actually do improve. And to a large extent that is guesswork.

As SPA can't be changed once someone is within 10 years of SPA, then effectively a guess has to be taken on how the mortality of that cohort of individuals 10 years younger than SPA will subsequently improve. And the period from age 20 up to age (SPA - 10 ) is of a similar size to the period from age (SPA - 10) to the expected age of death.

And if there is a rule that SPA once set at a 5 yearly review can't subsequently be reduced, then the SPA for 20 year olds could be set entirely based on projected improvements in mortality rates, none of which actually happen.

It is a point made also by the actuarial post article linked to earlier.

SnowMan

SnowMan wrote: »

I will adjust the numbers based on the new ONS data that is due to come out shortly according to the actuarial post article.

I've now adjusted the figures based on the 2012 projections out today. Interestingly the relevant cohort expectations of life are slightly less than the expectations in the 2010 projections.

The result is that based on the main projection, the increase in SPA from 67 to 68 and from 68 to 69 can both be expected to happen one year later than previously estimated using the 2010 projections.

So the increase from 67 to 68 can now be expected to happen between 2036 to 2038 (so those who have attained age 45 or over in 2013 would not be affected by this increase).

And the increase from 68 to 69 can be expected to happen from 2049 to 2051 (so those who attained the age of 33 or over in 2013 would not be affected by this increase).

Of course the actual figures will be based on the latest projections when SPA is assessed in the next parliament, and the precise detail of the calculations could change things also.

And it assumes I've got my calculations correct also!

SnowMan

SnowMan wrote: »

I've now adjusted the figures based on the 2012 projections out today. Interestingly the relevant cohort expectations of life are slightly less than the expectations in the 2010 projections.

The result is that based on the main projection, the increase in SPA from 67 to 68 and from 68 to 69 can both be expected to happen one year later than previously estimated using the 2010 projections.

.....................

And it assumes I've got my calculations correct also!

I've found the Towers Watson analysis of the new ONS Data on their website. This suggests that my conclusion that the new data pushes back the expected date of SPA increases by 1 year versus the Autumn statement position based on the old ONS data, was correct

These increases come slightly later (around one year for the increases to 68 and 69) than would have been expected based on the previous set of ONS life expectancy assumptions

However Towers Watson have calculated the increases to SPA 68 and SPA 69 to be 2 years earlier than I have calculated.

Plugging the new ONS life expectancy assumptions into the Government’s recently unveiled formula for increasing the State Pension Age points to it:

• Reaching 68 in 2036 (starting to rise in 2034)
• Reaching 69 in 2049 (starting to rise in 2047)
• Reaching 70 in 2063 (starting to rise in 2061).

If I changed my assumptions slightly I could change my calculations to the SPA 68 increase being between 2035 and 2037 and the SPA 69 increase to between 2048 and 2050. But I'm struggling to make it a further year earlier than that. But it is not unreasonable of Towers Watson to assume the Government will find a way to push the formula to its limits to speed up the increases.

There is no correct answer, as we are guessing how the government will apply its formula based on limited information.

The Towers Watson link above has an excellent and interesting geek explanation of what has caused the change in the expectations.

Loughton_Monkey

margaretclare wrote: »

........

Yes, smoking has declined. It's just over half a century since the first reports were published on the effects of smoking. If you look at any of the old films you see things that would make us shudder now. Lighting up in someone's face, having a conversation in a cloud of smoke...

Nowadays the big threat seems to be obesity.

Agreed.....

I am of an age when I remember before the "Nanny BBC" when they didn't have all these snippets on drink more red wine, don't drink red wine.... Don't drink coffee, Do drink coffee because it reduces.....

They used to fill time (on local television anyway) by interviewing the latest local 100-year-old. I recall many, many such snippets, and the question always asked [after platitudes about the Queen's telegram] was "To what do you owe your long life?"

I have never heard any one of them say anything like "Ah! I exercised a lot, and didn't drink"... or "well I'm a vegetarian..."... or "I made sure I avoided fatty foods...."

This all makes me rather suspicious of "advice". There are simply too many people - doing ill-founded research - and coming up with "linkages" but putting them down as "cause" and trying to tell us all how to live our lives.

The latest one - only the other month - exposed what's going on. We got the most severe warning about drinking too much coffee because it took years off I life. Fact! But when someone half sensible looks at it, they noticed that they simply took 1,000 or so people, recorded their coffee drinking, and watched when they died. Heavy coffee drinkers died earlier than light or non drinkers.

Until someone pointed out to them the huge linkage between smoking and drinking coffee, only to find that the early death could be more than explained by smoking alone. Coffee drinking is benign.

margaretclare

The latest one - only the other month - exposed what's going on. We got the most severe warning about drinking too much coffee because it took years off I life. Fact! But when someone half sensible looks at it, they noticed that they simply took 1,000 or so people, recorded their coffee drinking, and watched when they died. Heavy coffee drinkers died earlier than light or non drinkers.

Until someone pointed out to them the huge linkage between smoking and drinking coffee, only to find that the early death could be more than explained by smoking alone. Coffee drinking is benign.

Oh yes, this makes absolute sense. I remember my late first husband, who didn't live to see his 60th birthday. I've sat across the table from him when we were relaxing with a coffee, watched his hands making the movements almost automatically, reached for his fag packet, lit up, continued chatting and had barely realised what he was doing. This was at a time when he was supposed to have stopped smoking because he'd had coronary bypass surgery at a time when it was really new in the UK (the mid-1970s). Smoking went with a coffee like horse and carriage! What fascinated me was watching the movements automatically, like a reflex action.