The state pension age may need to rise beyond the life expectancy of some of the UK's poorest places in order to be compatible with retaining the “triple lock” on payments, MPs have today warned.
In a report published this morning, parliament's Work and Pensions Committee warned keeping the policy will push the pension age to over 70 – beyond the average life expectancy in areas including two parts of London.
The committee commissioned the highly-respected Institute for Fiscal Studies to estimate the state pension age increases necessary to counterbalance expected increases to payments under the so-called triple lock system. The result? It will need to reach 70.5 years by 2060.
The triple lock increases state pension payments annually by either inflation, average earnings growth or 2.5 per cent, whichever is highest. Last year the Work and Pensions Committee called for it to be scrapped altogether from 2020.
Average male life expectancy in Tower Hamlets and Lambeth is is 69 and 70 respectively, and residents in parts of Merseyside, Manchester, and Leicester could also lose out in the face of a new state pension age of 70.
Today committee chair Frank Field said: “With the triple lock in place the only way state pension expenditure can be made sustainable is to keep raising the state pension age. This has the effect of excluding ever more people from the state pension altogether.
“Such people will disproportionately be from more deprived areas and manual occupations, while those benefiting most will be the relatively prosperous.
“By 2020 the state pension will be at a level where it will provide a decent minimum income for people in retirement to underpin private saving, and any savings they have will be kept on top of, not clawed back from, the state pension. The triple lock will have done its job and it will be time therefore to retire it.”
The Conservative manifesto pledged that the system will remain in place for the duration of this parliament.
But in last year's Autumn Statement, chancellor Philip Hammond suggested it could be scrapped in future as part of a review of public spending priorities.
“As we look ahead to the next parliament, we will need to ensure we tackle the challenges of rising longevity and fiscal sustainability,” Hammond said.