Labour is considering making a variable state pension age (SPA) part of its retirement policy.
Shadow pensions minister Alex Cunningham told New Model Adviser® his party was considering putting forward a case to allow people to access their state pension at different ages depending on their career and life expectancy.
‘I worry about those people who have spent their lives in heavy manual jobs or have been on their hands and knees scrubbing floors and are now getting on in years. They may want to retire at 60 or 62, how do we know what state pension to actually give them?' he said.
‘A steel worker on Teesside may retire at 60 or 65 and he might live for another three or five years and get five years of his state pension. Whereas a woman who has sat behind a desk all her life in the City might live to 95 and get 30 years’ worth of pension.’
The idea of a variable SPA emerged last year as part of former CBI-chief John Cridland's review into the state pension.
Although Cridland's initial report suggested people could be able to claim their state pension at different ages depending on their career or life expectancy, he has since said the policy would be 'horrendously complicated' to administer.
Cunningham said it was critical that the SPA system worked for everyone, across the country and for different professions.
‘We have to look at how we can make sure that everyone gets value of their state pension. We have no figures on it, we need to understand how that would work and that is one of my policy groups will be doing is looking at how we can get a better deal for those who have had the toughest physical lives,’ he said.
Cunningham used the example of insurers basing annuity rates dependent on life expectancy and questioned how that should apply to the SPA. However, he stressed that at this point he is gathering information about it and going into the details of how policies could potentially work.
Lifetime ISA worries
When asked about the lifetime ISA, which will be launched in April, Cunningham said this is something ‘which worries me’.
‘It has been touted as an alternative to a pension but I don’t see it as an alternative to a pension; it doesn’t have the same advantages in terms of tax relief and I am very concerned that people start saving into that.’
Cunningham went on to say he thought the government would do away with the policy once it realises it is not meeting its aims.
‘It was an idea plucked out of a conjurers hat,’ he said. ‘I don’t think it has got a long time to live to be honest because the product is not going to achieve what the former chancellor George Osborne was hoping it would achieve.’