24 May 2006
The Actuarial Profession has warned ministers that they must be
realistic about how and when they will increase the State Pension
Age.
The call came immediately before the publication of the DWP's
White Paper on pensions. Michael Pomery, President of the Institute
of Actuaries, said: "We are very much in favour of gradually
raising the State Pension Age, in order to help pay for the
widely-trailed restoration of the earnings link. This should be
part of a broader strategy that seeks to enhance the Basic State
Pension and prevent the spread of means testing.
"We are worried however that there might be a temptation to be
over-prescriptive now about exactly when, and to what age, the
State Pension Age will need to rise, which is something ministers
must be on their guard against. Promising a State Pension Age of 68
in 2050, for instance, is unrealistic, as there is simply no way
that anyone can accurately predict future longevity trends 44 years
in advance.
"Instead, we favour a long term approach that would tie the
pension age to average longevity, so that any extra life expectancy
should be spent 2/3 in work, 1/3 in retirement. This is sensible,
affordable - and, most importantly, easy for people to
understand.
"However, there is always a temptation for politicians to
mortgage tomorrow's pensions for political gain today. Whilst
predicting average life expectancies in 2050 is uncertain, that
must not become an excuse for government inaction. We believe
making the Pensions Commission permanent would be the best way to
prevent such a tendency. It would also help ensure that we maintain
a fair future framework for any extra years lived between work,
rest and play.
"Finally, the Basic State Pension, at whatever age we become
entitled to it, will never give more than a basic standard of
living in old age. We all need to understand that we will have to
save more, and for longer, in order to ensure adequate retirement
incomes."
