The IFS warns that if the current system isn’t reformed, the state pension age (SPA) would need to keep on rising, perhaps to 74 by 2069. Doing this would inevitably increase old-age poverty.
Moreover, an ever-rising SPA means more people in serious ill-health, who genuinely cannot keep working, are likely to be plunged into poverty.
Rising average life expectancy does not justify increasing the SPA either.
square STATE PENSION Scrap triple lock pension to avoid raising retirement age to 74, IFS warns
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There are alternative ways to reduce state pension spending which come with far less damaging impacts.
Increasing the qualification criteria to 45 or even 50 years of NI contributions saves money in the public purse. Allowing people to buy extra years to bring them up to a full NI record (at a rate fairer to taxpayers than the current, extraordinarily cheap, voluntary contributions) would also increase revenue.
Thirdly, reforming the state pension triple lock can improve the affordability of the current confused system. The 2.5 per cent element has no economic or social rationale, and moving to a double lock, whereby the state pension will increase by either average earnings (to keep it at a fixed percentage of average workers’ income) or by inflation if prices are rising much faster, reduces long-run costs. Pension Credit should also be part of this double lock.
Baroness Ros Altmann is a Tory peer and pensions expert
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