Raising the State Pension Age to 68

Debate between Patricia Gibson and Nigel Mills

Wednesday 1st February 2023 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

I beg to move,

That this House has considered the matter of raising the State Pension age to 68.

I thank the Backbench Business Committee for providing the time for this debate, and Members for staying here on what I know is a tricky day for travelling. Some people may have somewhere more exciting to get to later in the evening, and I suspect we will not be able to drag this out until 7 o’clock, but you never know. There is plenty to talk about on pensions, and we can but try.

I wanted to hold this debate because the Government have recently received the periodic review of the state pension age from Baroness Neville-Rolfe. They have not yet published that review, but we have been seeing stories in the media suggesting that there may be an announcement in the Budget of a change in date for the increase in the state pension age to 68 from 2044 to sometime in the 2030s. I should probably declare an interest in that, depending exactly when that choice is made, it may change my own state pension date. That is on the record, but I have no idea what year the Government are thinking about.

I hesitate to say it, but this is actually a really important decision that will have a very significant impact on a lot of people. It needs to be made very carefully, and with very careful consideration of the impacts on people of different genders, backgrounds and occupations and on those in different parts of the country. Its impact for a manual worker will be very different from that for a professional, or someone living in an area with much lower life expectancy than, say, in the south-east of this country, and it is the same for those who have had a high-earning career rather than a lower-earning one. So it is quite a hard thing to get right, as various studies have shown. The other reason to be very careful is that the whole success of the pension regime depends on certainty and predictability, and if people start to think that nothing is certain or predictable, then they cannot have confidence, the whole basis on which we save for our retirement starts to become unclear and people start showing behaviours that we would much rather they did not show.

I actually support—I did support and I still support—the position the coalition Government got to in the 2010 to 2015 Parliament, in which we raised the state pension age to 66 in 2011 and brought forward the increase to 67 really quite considerably. That was based on the principle that we should get roughly a third of our adult life in retirement, and I think we should be very clear about sticking to that principle. However, it is right that, if life expectancy increases, that has to be paid for. If we are going to get longer in retirement, we have to find a way of paying for that. The inevitable impact is that we have to work a bit longer to pay for that. If there is a clear principle that we will spend about a third of our adult life in retirement, people can at least understand what the situation is and what may be coming down the line. I urge the Minister to not move away from that principle, to at least give people that understanding.

I fully support all the other pension reforms introduced by the coalition Government, including the successful roll-out of auto-enrolment and the introduction of the single-tier state pension, which was designed to say to people, “You will get a state pension and it will be above the poverty threshold, so there will not be any means test. If you save more and have your own private pension, you won’t be losing benefits.” It is therefore absolutely worth saving for that pension. The success of auto-enrolment ties directly into that. Everybody is clear that it is well worth their doing that.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

May I take the hon. Gentleman back to a point that he made a moment ago about raising the pension age because of increasing life expectancy? That has always been the justification that has been given. However, at best, life expectancy is now stalling, and in Scotland it has been falling for the past two years. Does he agree that, in that context, it seems bizarre to use that information to raise the age further and faster?

[Nigel Mills]

I will come to that point in my argument. If we accept that we should stick to the principle that we get roughly a third of our adult life in retirement, the reason why we would increase the state pension age is that we have seen a three-year increase in life expectancy, and that should give us two more years on the state pension age. So for every 12 months life expectancy goes up, people should effectively get four months of that in retirement and expect to work for eight months of it. The hon. Lady is right: the data does not now show, sadly, life expectancy increasing, certainly not at the rate that was forecast by all the actuarial calculations at the time of previous reviews. The data for the 2018 to 2020 reference period showed that male life expectancy had fallen by seven weeks compared with the 2015 to 2017 reference period, and female life expectancy had gone up by half a week, or something really quite insignificant.

On that logic, we would be thinking, “Yes, we are due a periodic review and it would say that nothing has changed—in fact it has got a bit worse. There is nothing to see here, so let’s not make any more changes.” The Minister can intervene if she wants to say that that is what the review says, and we can all go home quite early, but I suspect that nothing is ever quite that simple.

I suppose what we are asking the Minister to confirm later in the debate is whether the Government will stick to the principle of people getting a roughly fixed proportion of their adult life in retirement, and whether they will therefore be guided by that 33% figure. The hon. Lady’s point would appear to suggest that the position is, if anything, worse than that at the time of the Cridland review six years ago and we should presumably come to the same conclusion as that. That is not what the media stories are suggesting. They seem to be saying that the increase to 68, scheduled for the mid-2040s, will come forward to perhaps as early as the mid-2030s—possibly around 10 years from now.

That leads me on to two keys asks of the Government, and I think they were principles that were previously set. First, increases in the state pension age should always come with 10 years’ notice, so we should never give people less than 10 years to have to change their retirement plans. Perhaps the Minister will confirm that there will be at least 10 years’ notice.

Furthermore, we should make one of these changes only every 10 years; we should not be making multiple changes. Had the Cridland review been handled differently, we could have had the increase to 66 from 2011, the increase to 67 in 2014, and then the move to 68 a few years after that. That would have been far too much change too quickly for people to handle.

Those key principles that we established were not that different from what the Labour Government did in previous pension Acts when they brought in pension age rises. It is overwhelmingly in the interests of a stable pension system that we keep those fundamental principles in place. We do not want to end up in another situation like we had with the Women Against State Pension Inequality Campaign, where women—and I met many of them in my constituency—genuinely did not know that their state pension age was going up significantly until they tried to claim it or thought they were about to get it, only to in some cases find out that it was another five or six years away. That is why we need to ensure we have that certainty in place. I know that that was changed in the Pensions Act 1995, so everybody had at least 15 years’ notice for most of it, but people just were not told, or at least not in a way that they understood or noticed. We need a clear, stable pension architecture, as was established under the coalition Government, with a single-tier state pension above the poverty threshold, so that people could save for themselves and had predictability.

This is not random conspiracy theory nonsense. Articles are occasionally written by people who just do not believe that when they get to retirement age, their state pension will be there, or that they will ever get to it. In fact, there was an article in the Daily Mail raising exactly that point. Reading other stuff around, we see that there is a general pervasive fear that people will never get to state pension age—that it will always be pushed just out of reach and they will never actually get there. That is why we need to be absolutely clear that that is not what we are trying to do here. We have a predictable and reliable state pension system that people can factor into their retirement savings and then use to plan for the later years of their life. I am sure the Minister will be able to reaffirm that that is absolutely the Government’s position.

There is a question about whether the Government are minded to make a change. I think the Cridland review suggested that we could have brought the change forward to the late 2030s, at least, so it should not be a complete surprise if we think that 2044 is probably too late and would result in that figure of roughly 33% becoming a bit generous and people getting a bit longer than that. We need to set out the rationale for that pretty clearly and try to work through how we can help people who will be put in the most difficult position by that change. Intriguingly, the Cridland review said that if the Government are after Budget savings, increasing the state pension age is not a very clever way to do that. Instead, the review recommended abolishing the pension triple lock, which, I suspect, is not a view that has great support around Parliament. Hopefully this latest review does not re-recommend that, and the Government will not accept it if it does.

There were, though, some sensible analyses and recommendations as to what we can do to help people who are out of work in their mid-60s because they are either not really fit for work or not realistically going to get a job then. How do we give them financial support when we cannot give them their state pension? Do we subject them to full universal credit conditionality, or can we find a way of giving them a better experience? The review recommended potentially allowing people to access the state pension a year early, having a benefit equivalent to the state pension at least a year early or having a tapering-off approach to UC or UC conditionality, in case people fall out of work at just the wrong point.

I am not actually aware that the Government have ever really put in place any of those measures, so that would be another ask of the Minister. If the Government are thinking of making a change, while we do need the notice, can we also put in place a plan early for handling those who will be the worst affected by the change? I think we will need that for the rise to 67, anyway, which is coming up much sooner. It is just not realistic for people who fall out of work very late in their working life to get another job, and leaving them in financial trouble for those last few months before they get their pension seems to be a rather inefficient and cruel situation. Hopefully we will have made some progress on that before we get to the next pension age.

I would also like to say that I do not think handling this sort of issue as part of the Budget process is necessarily sensible. This change will not affect the public finances this year or next year, or, actually, the next Parliament; it may not be until the Parliament after that, or possibly even the Parliament after that, when this triggers any financial savings. There is not, as far as I can tell, any real Budget sensitivity to how the Government make this announcement, so I do not think we need to have a shroud of secrecy over what the Government are thinking of doing.

What the Government should do is publish the Neville-Rolfe review. It would be helpful if Baroness Neville-Rolfe could appear before the Work and Pensions Committee and explain the findings of her review. I think she has been brought back as a Minister in a different Department, so I am not entirely clear whether that would be permitted. Could we have a Minister from a different Department answering questions about a review they led before they were a Minister? I cannot think of any reason why not. Perhaps the Minister could confirm that the Government would be happy for her to come and explain the findings of her review. We could then have an open consultation about the content of that review and come up with a coherent policy, rather than it being dropped out by the Treasury and perhaps consulted on afterwards. The fear is always that once something has been announced, there is much less chance of it being changed.

I hope that the Government will get the feeling from this debate that people are concerned about there being further rises in the state pension age before we have had a chance to assess fully the impacts of the rise to 66—let alone the rise to 67 that is coming. I think we all recognise that it is a difficult situation and that it is worse for different parts of the country, worse for people in different occupations and possibly worse for women than for men. It would be useful to understand those implications and how we can mitigate them before we make any further decisions.

Fundamentally, if life expectancy data is not going as has been forecast, we should respond to the facts as they change and accept that our policy on expected changes to the state pension age can change as well, that we do not need the increases to come as fast and as often as we had thought, and that we should just leave things as they are. Let us hope that life expectancy starts to increase again. We can make these decisions then, rather than rushing into things that really hurt people, that bring uncertainty to the pension system—we do not need that—and that will probably not bring any financial savings for several Chancellors.

I look forward to hearing what the Minister has to say. Let me restate my point: our pension architecture and the foundations on which we have been trying to build the system are all still there and are robust, and we can all rely on them.