John Cridland has floated the possibility of replacing a universal state pension age with a "tailored"one, in a move to balance the challenges of increasing longevity with the need for fairness.
Mr Cridland's interim report on the future of the state pension, released today (13 October) did not make any recommendations, but set out some of the key challenges following an initial period of consultation.
Issues at the centre of the report included the population's increasing longevity, rising cost to the budget of pensions, intergenerational fairness, and shifting working patterns.
On the issue of pushing back the retirement age, the report pointed out that the UK already had the highest retirement age among OECD nations.
It said that encouraging people to work longer would help counter the negative effects of increased longevity.
"The nature of work and retirement is changing, as people move from the old model of a fixed retirement age leading to a defined period of retirement to a more flexible approach where people may wish to work part-time or change career in later life," the report stated.
However, it added that many professions had an early "burn-out" age.
One potential solution to this would be to shift from a universal to a "tailored" state pension age, the report stated.
"The current State Pension has a universal age of access and there has never been a time when the state provided a tailored approach in assessing eligibility to the contributionsbased State Pension. This universality is frequently challenged."
The report called for more evidence from stakeholders on this issue, asking: "What are the alternatives to a universal State Pension age? How can they be designed and implemented so that both the principles of Affordability and Fairness are retained?"
In a statement accompanying the interim report, Mr Cridland said: "The future of the State Pension age is a hugely important issue for this country. It must be fair and sustainable, and reflect changes in society."
He went on: "Whatever recommendations I decide to make in my final report, they will be underpinned by the importance of effective communications about the State Pension age. People need to be able to plan effectively for their own retirement."
Responding to the report, Retirement Advantage technical director Andrew Tully, said that "accelerating increases to the state pension age seems inevitable".
"We could also see recommendations for more flexible access to the state pension, like the pension freedoms available in private pensions. This could include early access for people wishing to retire sooner than a ‘nominal’ state pension age, due to ill health for example, but at a significantly reduced rate.
"Whatever happens, lessons need to be learned from recent experience to ensure any further changes to state pensions are clearly communicated," he said.
james.fernyhough@ft.com
