State Pension: Age Increase

Question

11:18:00

Asked by

To ask His Majesty’s Government what preparations they are making to inform people born on or after 6 April 1960 about the increase in their state pension age from 66 to 67 which will be implemented over the period 6 April 2026 to 5 April 2028.

My Lords, the Government recognise that information about the state pension age is crucial to retirement planning and are committed to communicating planned state pension age changes effectively. The department undertakes a range of activities, including awareness campaigns, digital tools such as “Check your State Pension age” and sending personalised letters. We are developing our strategy to communicate information and assessing the most effective ways to raise awareness about state pension age changes.

I thank my noble friend for her Answer. I remain concerned that we are only 17 months away from when people discover that they are not able to retire at the date that they thought they would. We know where this ends up: a finding of maladministration by the ombudsman and mass discontent. I urge the noble Lord, the noble Minister, the Baroness, to make sure that a mass campaign is initiated soon. Many people have an aversion to opening brown envelopes; we need this to be highlighted in the press for the next 17 months.

My Lords, I answer to anything really. The Government have already used an array of methods to communicate state pension age changes, including leaflets, advertising campaigns, digital tools and directly writing to everybody affected. Between December 2016 and May 2018, DWP wrote to all those in the group my noble friend is talking about—that is, those born between 6 April 1960 and 5 April 1961, which includes me—who have state pension ages between 66 and 67. In 2016, DWP launched a tool “Check your State Pension age” on GOV.UK and also “Check your State Pension forecast”. More than 31 million digital forecasts have been done plus another 1.5 million paper forecasts. I think it is working. The 2021 Planning and Preparing for Later Life survey talked to exactly those people and found that, of those with a pension age between 66 and 67, 94% either correctly identified their state pension age or overestimated it.

My Lords, with the increase in life expectancy in recent years, will the Government consider increasing the state pension age by more than one year in order to limit the tax burden on those of working age?

My Lords, life expectancy is increasing, but the rate of increase is slowing. Built into the Pensions Act 2014 is a requirement on the Secretary of State periodically to review the state pension age, taking into account life expectancy and a range of other appropriate factors. There have already been two of those reviews. The next one has to happen by March 2029, I think. I have no doubt that the Secretary of State will take account of precisely those matters.

My Lords, does the Minister agree that we do not want a repeat of the WASPI women scandal? We have been here before. If individuals are not properly informed about the change to their state pension age, will the Government consider introducing a clear appeals process or a safety net to ensure that no one is financially disadvantaged due to a lack of information? From past experience, we know that there will be many people who fall through the net, and we need to have an appeals process in place.

My Lords, it is crucial that everybody gets to know their state pension age, but the reality is that there are a lot of different ways in which people do that. I already knew that my state pension age was increasing. A lot of that was simply from information in the news and on television. One of the ironies is that, when I was first briefed about this, I was told that the department had written to everybody in that age category. I said that I had no recollection of receiving such a letter, but I was assured that it had happened. Last weekend, I moved house and, when I opened a folder of unfiled papers, what was sitting on the top but a letter dated February 2018 telling me that my state pension age would be 66 and two-thirds. The point is that different people receive information differently. I am of an age where I get most of my information on my phone, from which I am rarely parted, and from news consumption. We have to use every possible means of communicating to make sure that people get the information out there.

My Lords, is the Minister aware that average life expectancy is highly variable depending on many factors, including class? There are parts of Glasgow where people die in large numbers before their pension age, so I hope the Minister can reassure me that the idea of extending it will not be adopted when the people who suffer most are those who need the pension most.

My noble friend raises an important point. One of the requirements on the Secretary of State when she comes to do the statutory review of the state pension age is to look at issues such as life expectancy. Every now and again, someone comes up with the idea of varying the state pension age by, for example, location or profession. The reality is that, whereas there are differences between regions or professions, in some cases the differences within them are as great as or greater than the differences between them, so trying to find a way of doing something that would be fair, other than a simple state pension age, is challenging. The real challenge for this Government, as for everyone, is that we should not have these regional variations in our country. We are one country, and we should be tackling those kinds of regional inequalities so that we do not end up in this position.

My Lords, is it not the case that we should move to when people start paying national insurance? People often start work at 16 in construction and other jobs, while others do not start work until 23 or 24. Should there not be some understanding about the different types of people, how long they are in work and what jobs they do?

There are variations. One of the challenges is that, now we want to keep young people in education, training or employment until 18, we find that fewer people leave school and start work early. My noble friend is raising an underlying point that is really about fairness. We want to see everybody having the opportunity to study for as long as is genuinely helpful and suits them, then to move into fulfilling work and to be able to progress in it over time. I return to one of the challenges. The Secretary of State will consider all factors, but if we look at how difficult it is—and we know how hard we have had to work—to communicate a single state pension age, trying to communicate variable state pensions ages risks complicating it. But my noble friend raises an important point, and we will keep it under consideration.

My Lords, the Chancellor has announced that she is going to merge 86 public sector pension funds into eight megafunds. We have been talking about that for quite a long time. Will the Minister update the House on how and when that will happen?

My Lords, information will be coming forward. We are doing a pension review at the moment. Stage 1 is coming to an end and stage 2 is coming through. There is also a pensions Bill coming through, and when that comes through, all the details will be made available.

My Lords, why is it that those who are above the state pension age, whatever age it is, and still working and contributing to society are not required to pay national insurance? We are missing £1 billion-plus to the Treasury. National insurance is a tax; it does not pay for anything. It should be paid by all those who are working, irrespective of age.

My Lords, of all the weeks when I am not going to start making up national insurance policy on the hoof, this is most definitely one of them. However, I hear what my noble friend says, and I will pass that along.

My Lords, what assessment have the Government made of the impact on employment, particularly for older people, of increasing NI contributions for employers, bearing in mind that the winter fuel payment has been withdrawn?

My Lords, to separate those two out, the Treasury has published documentation on GOV.UK relating to the Budget and an impact assessment of different aspects of the Budget. On the question of the winter fuel payment, the noble Baroness will know that the vast majority of people who will be entitled to it are being encouraged, if necessary, to apply for pension credit or other benefits. For most of the rest, many of them will not be in employment and will not intend to be in employment. The winter fuel payment is aimed at people of pension age, so I do not see the connection between the winter fuel payment and national insurance, but if the noble Baroness wants to speak to me about it afterwards, I am happy to talk to her.

My Lords, does my noble friend agree that one of the best ways to get these kinds of messages over to older people is through the network of voluntary organisations, particularly Age UK, Age Scotland, Age Cymru and Age Northern Ireland? Will she and her department mobilise that network to get this message across?

My noble friend is a great advocate for Age UK and its counterpart organisations, and they welcome his advocacy. We have a good relationship with Age UK and other charities in this sphere. They have been very effective at getting messages out, but I come back to the fact that we have to get messages out across the piece. Messaging about the state pension age is aimed at people who are not yet retired, including me, so we need to get messages out everywhere people get their information. One of the ways of doing that is through family and friends—spread the word. Please make sure that everyone is aware of this: go on GOV.UK to “Check your State Pension age” and “Check your State Pension forecast”.