Response to Govt Actuary Dept predictions on State Pension funding
10 Jan 2018
Calum Cooper, Partner at Hymans Robertson responds to GAD predictions that state pension funding will be depleted by 2035 unless National Insurance Contributions are increased:
“It is not surprising that the Government Actuary Department has reached this conclusion that state pension funding levels are dwindling. The current system is dangerously unsustainable when you consider how technology and rising life expectancy could transform our working landscape over the next decade or two. The UK currently spends £100bn p.a. on the State pension and that this is expected to double over the next 20 years and double again in the following 20 years, it is clear that the current system needs to change.
“The chances are that our working landscape will look radically different over the next few decades. Life expectancy is continuing to rise faster than the State Pension age meaning many people will feel compelled to continue working well into “retirement”. In fact, our own longevity analysis found that the state pension age should now be at 74, if it had kept pace with life expectancy from the second world war.
“However, all of this could be swamped if the predicted potential for technological unemployment by AI comes true. The Bank of England and PwC have estimated that 1 in 3 jobs are currently in danger from automation. Clearly there is a wide range of outcomes but this outcome would be massive and would have a devastating impact not only on NI financing but would cause demands on state support to reach an all-time high. Perhaps it’s time to think beyond the State Pension and look towards something more age-agnostic.”