State pension age: Reeves urged to pay retirees for five years even if they die
A former minister has called on the government to pay people who have reached state pension age for at least five years, even if they die.
Sir Steve Webb, who was pensions minister when the triple lock was introduced, said the state pension age should be raised but called on Chancellor Rachel Reeves to introduce a five-year “minimum guaranteed payment” that would protect those expected to live less. Then, if someone died within those five years, their heirs would receive the payment in their place.
Sir Steve, who wrote a report for pension consultancy LCP, where he now works, argued that the retirement age should rise by a year every ten years to account for rising life expectancies and that people should receive a state pension for an average of 20 years.
He added that those who die before reaching state pension age but have paid into the system should also receive a similar guaranteed payment, for example through the working-age death benefits system.
The calls come as Ms Reeves is under increasing pressure to close the gap in the country’s finances in this month’s budget.
Sir Steve told I: “Our proposal for a five-year guaranteed minimum payment period represents a ‘something for something’ reform. Those who have paid into the system all their lives will be guaranteed that they or their heirs will receive the minimum payment when they start receiving a pension. This would be a concrete way of addressing concerns about injustice every time the state pension age increases.”
Spending on state pensions has risen from about 2 percent of GDP over the past eight decades to about 5 percent now, according to the Office for Budget Responsibility, and it predicts it will reach 7.7 percent by the early 2070s.
The financial watchdog said in a report published in July that this increase was due to the combined effects of the triple lock policy as well as the aging population.
The state pension age, which has remained the same for decades, rose from 60 to 65 for women in the 2010s; Between 2018 and 2020, it reached 66 for both men and women.
Life expectancy in the UK is now 83 for women and 79 for men, according to the latest figures from the Office for National Statistics.
In the United Kingdom, life expectancy at birth between 2021 and 2023 was 78.8 years for men and 82.8 years for women, while life expectancy at age 65 was 18.5 years for men and 21.0 years for women.
The proposal comes amid reports that the chancellor will target employees’ pension contributions in a bid to raise more money. It is said to be preparing to cap the amount of a person’s salary that can be sacrificed for extra pension contributions before national insurance contributions accrue to £2,000 per year.
