Scrapped state pension age plan may cost taxpayers £250 a year

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

The public purse is set to take a hit due to a decision to abandon state pension age increases. That is according to a think tank which has warned taxpayers will face an equivalent cost of £250 each per year.

The Institute for Fiscal Studies (IFS) has said there may be significant costs for Britain to bear.

The state pension age is set to rise from its current level of 66, gradually upwards to 67 and then 68.

Under the current schedule, the increase to 68 is set to occur by 2046.

However, reports earlier in the year suggested Chancellor Jeremy Hunt was keen to bring forward these increases to the end of the 2030s.

Last week, it was reported the plan had been scrapped after a decline in life expectancy caused by COVID-19.

Experts also suggested an accelerated hike in state pension age would not prove a vote winner, with a General Election approaching in 2025.

Jonathan Cribb, associate director at the IFS, said there was a “justification” for delaying a state pension age rise.

However, to do so would cost taxpayers money.

Don’t miss…
Barclays warning after man targeted in cruel pension call [WARNING]
‘Hundreds of thousands’ more underpaid state pension[LATEST]
State pensioners could increase payments by up to £14.75 per week [EXPLAINED]

He explained: “There are significant long-term fiscal challenges coming from the ageing population.

“Delaying the rise in the state pension age will cost the Exchequer around £8-9billion for each year of delay.”

According to analysis from The Telegraph, this would mean the equivalent of a £250 annual cost for taxpayers for the seven year delay.

A 2017 review undertaken by John Cridland encouraged the Government to raise the state pension age to 68 between 2037 and 2039.

However, one expert has said if the state pension age increase were to be brought forward in this way, some seven million people would be affected, waiting longer to receive the sum.

Catherine Foot, director of Phoenix Insights, added: “A strategy to raise the state pension age in line with average life expectancy is not an adequate policy response to the deep and growing health inequalities we experience in this country.

“Many people on low incomes in the UK fall out of work because of ill health and disability years, and in a significant number of cases, decades before reaching state pension age.

“We urgently need to take a more comprehensive look at the role the state pension plays alongside the working age benefits system and other initiatives such as auto-enrolment if we are to develop a policy response that genuinely addresses the realities of inequalities in work and health.”

What is happening where you live? Find out by adding your postcode or visit InYourArea

Becky O’Connor, director of public affairs at PensionBee, said such a rise would have “gone down like a lead balloon”.

She said this would have particularly been the case after Mr Hunt handed tax breaks in pensions, perceived to benefit higher earners.

Ms O’Connor added: “Amid these changes, an earlier rise in the state pension would have been viewed as penalising those who are dependent on the state pension for retirement, by effectively forcing them to work longer.”

A DWP spokesperson recently told “The Government is required by law to regularly review the state pension age.

“The next review will be published by May 7.”

Source: Read Full Article