Treasury accused of pocketing £5bn state pension savings
The Treasury has been accused of pocketing £5bn from the state pension age increase that should have been used to help struggling older workers.
Think tank Phoenix Insights reported on Wednesday that the government raised £4.9 billion in savings by raising the state pension age when the money should be used to help those who can’t wait another year for retirement. Can.
The age at which you can get state pension was gradually increased from 65 to 66 on a monthly basis from March 2019. The law stipulates two further increases – the increase should come to 67 for those born on or after April 1960. Effective until 2028, and increased to 68 between 2044 and 2046 for those born on or after April 1977.
However, many in ill health who can’t work or who are victims of age discrimination in the workplace will struggle to make ends meet for an additional year before a state pension can be paid.
It comes after standing in the firing line of massive redundancies during the pandemic, and many newly unemployed have been put into an early retirement they can’t afford and have to get their much-needed state pension. Will be forced to wait longer. ,
About six million pensioners depend on state pensions for most of their income during their retirement. The think tank’s Katherine Foote said the government needed to take steps now to save future generations from poverty.
Between 10 and 20 pc of those savings should be used to reduce the impact on individuals most affected by promoting growth and opportunities for older workers. She said: “Reinvesting only a fraction of the money saved by raising the state pension age could help more people stay in work longer and support those for whom this is simply not possible.”
The think tank said a part of the money should be used for a communication campaign to spread the news of raising the state pension age. Ms. Foot said that many people affected by these changes in the past have argued that communication has diminished sufficiently. She said: “We’re asking people to make good long-term decisions about retiring, but with too little information and too little support.”
Sir Steve Webb, a former pensions minister and now partner in consultancy LCP, said there were huge Treasury savings that could go to help those most affected by the state pension ageing.
He said: “There is an absolute gap between working age benefits and pensioners. If you are on Universal Credit you get £80 per week but those with Pension Credit get £170 per week. Those who are unemployed or sick will suddenly have to spend another year with less money.”
However, he warned that implementing this in reality could be a challenge, adding: “Ill health is incredibly difficult to define and making rules around it can be messy.”
Ross Altman, also a former pensions minister, has long called for more flexibility around the state pension age, claiming that those who need to retire early should have more capacity.
“If you really cannot work because of your health then the pension credit should be made available first. We have a health crisis for many people in their 50s and they should be able to get pension benefits as soon as possible,” she said.
Any change in the state pension age has previously proved controversial. Lakhs of so-called “Vaspi” women argued that they did not have enough notice when the government equalized the state pension age for men and women between 2010 and 2020.
The Treasury was contacted for comment.
