State Pension  

Providers warn of Labour's 'gargantuan' pension plans

Providers warn of Labour's 'gargantuan' pension plans

Pension providers have criticised the Labour party for making "gargantuan" promises on the state pension that could have “enormous ramifications” on government spending.

State pension age has been set at 65 for men since 1925, and was equalised for women in November 2018.

Under current plans the state pension age for both men and women will start to increase to reach 66 by October 2020 and to reach 67 by 2028.

As part of its manifesto, published today (November 21), Labour pledged to leave the state pension at 66 and not to increase it in the future. It would also review it for physically demanding jobs.

It also promised to maintain the triple lock, ensuring the state pension continues to increase each year in line with the highest of inflation, earnings or 2.5 per cent.

But many pension providers have called out the party after it failed to mention the impact this policy would have on taxpayers in its costings document.

Tom Selby, senior analyst at AJ Bell said freezing the state pension age at 66 was a “gargantuan promise” from Labour which would have “enormous ramifications” for those affected, society as a whole and long-term government spending.

Mr Selby said: “It is incredible that the impact this will have on taxpayers doesn’t appear in the policy costings. 

“This may simply be because planned increases in the state pension age run beyond the next Parliament, but such a short-term approach to something as vital to the long-term future of the UK as state pension reform is hardly encouraging.”

Steven Cameron, pensions director at Aegon agreed the changes would come at a heavy cost to taxpayers.

Mr Cameron said: “Labour is currently leading the charge in terms of the generosity of state pension commitments. 

“Keeping the state pension age at 66, cancelling the planned increase to age 67 and considering allowing earlier access to those in physically arduous or stressful occupations will be welcomed by those concerned over their ability to keep working longer and who lack sufficient workplace or private pensions to allow them to choose to retire before state pension age.

“Generosity to state pensioners does of course come at a cost, particularly as the UK continues to enjoy longer lives.

“There is no ‘fund’ to pay state pensions, with today’s state pensions being ‘paid as you go’ from National Insurance contributions from today’s workers who will face an increasing burden.”  

This state pension age freeze has also been criticised for not taking life expectancy into account which further increases the burden on working people.

Further pensions policies also included a pledge to work with Waspi women — women born in the 1950s who were the first to be affected by a sharp rise in the state pension age — to design a system of recompense for the “losses and insecurity” they had suffered.

Jon Greer, head of retirement policy at Quilter, said Labour’s pledges on pensions were “out of step with demographic changes” happening in the country.