In its response to the call for evidence on increasing state pension age to 66, Club Vita, the only company dedicated to providing longevity analytics to pension schemes, outlines key recommendations to the DWP.

Key Recommendations:

• If the primary purpose of the state pension is to prevent poverty in old age, the DWP needs to focus on the life expectancy of those most reliant on state pensions, not UK average life expectancy
• The DWP should consider ‘healthy life expectancy’, which is increasing at a slower rate than total life expectancy, to assess how much longer people should be expected to work for
• Ensure that policies are co-ordinated to ensure that savings through increasing the State Pension Age are not redistributed through other welfare benefits

Steven Baxter, Longevity Consultant, Club Vita said:
“In looking to raise the State Pension Age (SPA) to 66 we urge the DWP to, first and foremost, consider exactly what the state pension is intended to do.  If the primary purpose is to act as a ‘safety net’ to prevent poverty in old age, greater emphasis must be placed on the life expectancy of those who rely most on the state pension, rather than national average life expectancy.

“Life expectancies vary widely between different parts of society.  Those with lower incomes and unhealthy lifestyles typically die 10 years earlier than the most advantaged groups of society.  By using life expectancy at the national level to inform the acceleration of planned changes to SPA, these disparities will be ignored. Ultimately, lower income individuals, who are most reliant on the state pension, would stand to lose the most.

Healthy life expectancy
“Although total life expectancy is rising, those extra years may not be spent healthy and able to work.  We believe the DWP should instead be focusing on healthy life expectancy, which reflects the period of life spent in good health. 

“Healthy life expectancy is increasing at a slower pace than the life expectancy the DWP is currently focussing on.  Failing to take this into account would provide an unrealistic representation of the ability of people to work for longer.

“We would urge the DWP to give greater focus to life expectancies that will accurately depict peoples’ ability to work later in life. 

Practical implications
“There are also practical implications to consider.  Increasing state pension age will not, in isolation, provide an affordable and sustainable welfare system if the money saved is largely redistributed via other welfare benefit payments.  Unless people are able to stay economically active for longer, these changes will do little to achieve the government’s overall objectives.

“We therefore urge the DWP to ensure that co-ordinated policies are put in place to support these changes, so that individuals and employers have enough time to adapt.”