Third State Pension age review: independent report call for evidence - published today

Universidad

QrizB said:

Tax_Slave said:

If the government increase state pension age to say 70, then simply more people will claim benefits as unable to work due to health issues.

Working-age benefits are, generally, lower value than the NSP / PC. So it's still a saving.

Although those benefits may be lower value, they are more expensive to administer, on account of them being conditional and/or means tested. I would not bank on those savings being too significant, even before considering the political cost. 

hugheskevi

Universidad said:

QrizB said:

Tax_Slave said:

If the government increase state pension age to say 70, then simply more people will claim benefits as unable to work due to health issues.

Working-age benefits are, generally, lower value than the NSP / PC. So it's still a saving.

Although those benefits may be lower value, they are more expensive to administer, on account of them being conditional and/or means tested. I would not bank on those savings being too significant, even before considering the political cost. 

It costs about £8bn to pay the State Pension for a single age-cohort, eg, 67 year olds. 

In comparison, the cost to run the entirety of DWP, including Job Centres, is around £6bn.

There would be a big saving from a hike to State Pension age if done immediately, but also a massive political cost. If done over a longer term there would be no immediate saving, and still a political cost. Even if done rapidly, eg, from 6 years hence like the changes from the 2010 administration, there would be the political cost without any useful savings to the current administration.

Universidad

hugheskevi said:

It costs about £8bn to pay the State Pension for a single age-cohort, eg, 67 year olds. 

In comparison, the cost to run the entirety of DWP, including Job Centres, is around £6bn.

You could be right about the administration costs being lower than I am imagining, but that would be because of a smaller proportion of the cohort claiming them. (It certainly is the case that it's up to an order of magnitude more expensive to administer means-tested, conditional benefits than flat benefits, on a case-by-case basis). 

We also have to account for the benefit costs, and (to an extent, as not recurring) the setup costs. 

The OBR say, of the pending rise to 67: 

"There are currently around 60,000 65 year-olds (excluding mixed age couples) in receipt of universal credit (UC), equivalent to 7.4 per cent of the 65-year old population. If the share of 66 year-olds in receipt of UC in 2029-30 remains at this level, and assuming average awards for 66 year-olds will be similar to those for 65 year-olds, this would cost £0.7 billion in 2029-30."

But I think it would be a fools errand to assume you could keep raising SPA and expect the UC costs to remain similar for each new cohort. Surely that would rise with age - and probably precipitously at some point? 

Wouldn't it be more likely that the cost of the rise to 67 would be more like 1b than 0.7b, and then 2b for the rise to 68, and then 4b for any rise to 69, and so on. Guesswork only as to the proportions, but the fact of the rise in costs per cohort at retirement must be a near certainty.

And that's just the UC claims, OBR also note "The working-age welfare spending impact could be higher if a significant proportion of those affected by the loss of state pension income claim extra-cost disability benefits."

But wouldn't we expect that a higher proportion of older people would claim those benefits? 

Whatever the thresholds are, it is all but certain that at some point a rise in state pension age actually starts to cost money rather than save it. It definitely wasn't the rise to 66, almost certainly won't be for 67, and it probably isn't a rise to 68, or even 69. But 72? 74? Maybe!

BikingBud

NickPoole said:

BlackKnightMonty said:

cloud_dog said:

NickPoole said:

I think they should abandon it, freeze retirement age and start to work on a proper fair taxation regime and redistribution of wealth.

I always agree with these comments... I think every one should pay the same tax rate (20%, 25%, 30%, whatever), and to allow lower earners to benefit 'more' fairly (proportion wise) the Personal Allowance /NIC levels are increased.  This would be holistically 'fair' whilst offering lower earnings a larger proportional benefit.

Yes, pie in the sky.

Low income earners already pay some of the lowest income tax rates in Europe, and have some of the most generous tax free allowances.

We need to boost productivity; this will help raise wages. Simply redistributing more and more from a few high earners is not sustainable. Taxing our way to growth is impossible.

Paying more boosts productivity - why else do CEOs and Bank Traders get so much? Giving them less would have the opposite effect.

Presumably applies at low end of pay scale as well as high?

Because they are in the Club!

Whereas those that actually produce,  get little recognition.

Arctos

I assume "Life expectancy" refers to a national average mean figure. Not a level playing field. though. People in certain occupations seem exposed to things that undoubtedly shorten their expected life span - yes the most dramatic with, for example, exposure to asbestos, coal dust etc. have been reduced. However, other stations in life seem to enjoy longevity - maybe associated with ability to access private medical care, keeping warm and well fed etc.. Maybe it's not simple and 4.4 j in Joe Crystal's helpful post is more important than "one size fits all".