Reduce SP age

AlanAlan

I heard an idea on LBC last night which was to actually reduce the SP age. Now this does make a bit of sense, in particular the idea behind this would be to reduce the number of oldies still working so freeing up posts for the youngsters. Obviously the idea needs a bit more thought, and one thing would be to allow people to take their SP say at age 55, but obviously reduced even if you had the requisite 35 years of NI contributions. So this could reduce the average age of the workforce, give people some hope of actually retiring because right now most of my 'younger' friends can't see this ever happening, because they will be in their 70's at the rate it's currently going. It may also give youngster a bit of an incentive to save into their own pension so they could retire at 55. It's as harebrained as any of the current government scheme, like the extra 3% stamp duty for second home! Be seeing you AA

hugheskevi

the idea behind this would be to reduce the number of oldies still working so freeing up posts for the youngsters

Isn't this just the lump of labour fallacy?

one thing would be to allow people to take their SP say at age 55, but obviously reduced even if you had the requisite 35 years of NI contributions.

Runs into issues with means-testing, and what you would do if someone taking it at age 55 later claims means-tested benefits. Would you refuse them - they made their bed, let them be destitute, or (more realistically) pay benefits.

That means the government would need some sort of income and/or capital threshold, such that to take it early the individual could demonstrate they would not be likely to need means-tested benefits. But such an individual probably has alternative income/capital such that they do not need to bring forward their State Pension. This is especially the case in the pension freedoms world, where DC pension pots can be used up rapidly early in retirement if that is what an individual wants.

give people some hope of actually retiring because right now most of my 'younger' friends can't see this ever happening

All the bringing forward would do is reallocate resources from later in retirement to earlier. The same can be done with a private pension. As the example below shows, a pension pot of just £50,000 would be enough to achieve the same as reducing State Pension for the age period 55-64. Most young people will build that up, particularly with automatic enrolment and mandatory employer pension contributions.

If the problem is inadequate retirement resources, early access is not the solution and may well make the problem worse if it results in lower lifetime earnings.

It may also give youngster a bit of an incentive to save into their own pension so they could retire at 55

What they gain between age 55 and SPA they lose between SPA and death, so they have to save the same amount (or even more) in their own pension either way.

A typical actuarial reduction for 10 years of early access to pension would be 40%+. That would make the £8,122 standard State pension worth £4,873.

If they live to age 87 that is £155,936 in total paid from the reduced State Pension compared to £178,684 from the standard pension.

Pollycat

AlanAlan wrote: »

I heard an idea on LBC last night which was to actually reduce the SP age.

Whose idea was it? Was it the sort of idea that comes from a group who've been in the pub for several hours?

Hasn't the Government been increasing the state pension age?

Lordy! Lordy!
Can you imagine the amount of ire from WASPI if this was introduced?

System

If the SP age is lowered, and hence the annual payment reduced (halved, it is estimated above) then older workers won't be able to retire, ever, because they will need jobs to supplement the meagre state pension.

Also, in order to give enough warning to all those who never take any notice of state pension age changes, the effects won't cut in for about 30 years so it's not going to solve any present labour problems.

Triumph13

hugheskevi wrote: »

Isn't this just the lump of labour fallacy?

Your link doesn't seem to be working, which is a shame because the OPs point was a perfect example of it. Lets see if this one works:
https://en.wikipedia.org/wiki/Lump_of_labour_fallacy

kidmugsy

They should reduce the age for men by a couple of years so that men and women can expect the same number of years of drawing the pension, on average. This should be done in the sacred cause of equality.

OldBeanz

kidmugsy wrote: »

They should reduce the age for men by a couple of years so that men and women can expect the same number of years of drawing the pension, on average. This should be done in the sacred cause of equality.

The MASPI campaign banner has been raised here. Let it fly high and proud.

bigadaj

So long as all those men have the decency to complain about the money being foisted upon them, with no notice or individual letter sent out.

coyrls

AlanAlan wrote: »

I heard an idea on LBC last night which was to actually reduce the SP age. Now this does make a bit of sense, in particular the idea behind this would be to reduce the number of oldies still working so freeing up posts for the youngsters. Obviously the idea needs a bit more thought, and one thing would be to allow people to take their SP say at age 55, but obviously reduced even if you had the requisite 35 years of NI contributions. So this could reduce the average age of the workforce, give people some hope of actually retiring because right now most of my 'younger' friends can't see this ever happening, because they will be in their 70's at the rate it's currently going. It may also give youngster a bit of an incentive to save into their own pension so they could retire at 55. It's as harebrained as any of the current government scheme, like the extra 3% stamp duty for second home! Be seeing you AA

Were they experts?

Thrugelmir

AlanAlan wrote: »

I heard an idea on LBC last night which was to actually reduce the SP age. Now this does make a bit of sense, in particular the idea behind this would be to reduce the number of oldies still working so freeing up posts for the youngsters.

Post war boom is still hittings it's peak. Who is going to pay the bill for all these retirees? Many of whom still have interest only mortgages to settle.

jamesd

kidmugsy wrote: »

They should reduce the age for men by a couple of years so that men and women can expect the same number of years of drawing the pension, on average. This should be done in the sacred cause of equality.

It's an interesting idea but won't quite do the job because the women will still live two years longer and money is not quite as valuable as being alive instead of dead.

Instead, a better plan is to redirect healthcare funding from women-specific conditions to male-specific or more common in men ones to try to equalise life expectancy. That takes care of both the state pension and dying sooner discrininatory outcome issues.