Other Citywire websites
Stay connected:

View the article online at http://citywire.co.uk/new-model-adviser/article/a647452

Flat-rate state pension to be linked to longevity

by Daniel Grote on Dec 24, 2012 at 08:05

Flat-rate state pension to be linked to longevity

The government’s plans for a £140-a-week flat-rate state pension will include linking the pension age to life expectancy, according to the Financial Times.

The longevity link represents the price of chancellor George Osborne’s support for the flat-rate state pension, according to the paper.

It said Osborne had been wrestling with welfare secretary Iain Duncan Smith over the reforms, insisting they are cost neutral. A link between pension age and life expectancy would keep a lid on the long-term cost of the reforms.

A white paper on state pension reform had been promised this summer, but was delayed after concerns from Osborne and prime minister David Cameron over the cost of the plans. It is now expected to be published next month.

Osborne had promised a link between the state pension age and longevity in the Budget this year.

22 comments so far. Why not have your say?

Richard Anderson

Dec 24, 2012 at 09:00

So every time new mortality tables or figures are issued we will have changes to the State Pension - Brilliant!

report this

G via mobile

Dec 24, 2012 at 09:05

The last few years will be a nervous affair as you wait to see if there's a last minute spike in life expectancy just before you get to the line. Great for planning. Surely there will be a rule that it can't change within 5 or 10 years to go.

report this


Dec 24, 2012 at 09:13

Hardly news. I thought they said this over a year ago. They went away to say precisely how it was to be done, but nothing on at for over a year. Perhaps this is it. And as for the £140. I thought that was last year's figure. Perhaps it will not be increased, which should help make it cost neutral.

report this

David IFA

Dec 24, 2012 at 09:14

Just hold on a minute have not the rules just changed regarding discrimination on account of gender. Women live longer than men so how can the government introduce state pension based on longevity ,when we are now meant to have gender equality.Seems hypocritical to me. Surely the European court will have something to say about this and block it.

report this

Danby Bloch

Dec 24, 2012 at 09:24

It is surely just common sense to adjust the retirement age to take account of changes in longevity. Our failure to do this in the past has led us to have unrealistic expectations and ballooning costs. Obviously we need to give adequate warning of upcoming changes.

More difficult to deal with are the problems of those whose longevity has lagged behind and for whom a postponed retirement age is a cruel impracticality. The increases in longevity are very varied by social class and other factors.

So an unemployment and sickness regime that has been designed for younger people who might generally be expected to return to work is typically not suitable for the prematurely old 60 year old who is unlikely to be re-employed.

report this

Chris Miller

Dec 24, 2012 at 09:33

Basically it's the theft of our income as it gets pushed back and back. We'll never ACTUALLY reach the SPA so we never get paid.

Great. Should save a fortune.

Merry Xmas Osborne

report this

Keith Cobby

Dec 24, 2012 at 09:34

The problem here, as I and others have been posting all year, is the continual tinkering and uncertainty. How can you plan over decades if the retirement age and entitlement keep changing.

report this

Bob Donaldson

Dec 24, 2012 at 09:59

Now being in my latter years in this job, and having seen the total and utter breakdown in the UK pension system, both State and Occupational, I do think that within 50 - 100 years this is going to be an exceedingly poor country to live in at retirement.

With the demise of final salary schemes, unrealistic contributions being paid by both employers and employees to money purchase schemes and even with the introduction of NEST many individuals are going to be impoverished in retirement.

Whilst we may not have so many of the manual jobs that we had in the past, we now have burn out amongst many employees by the time they are aged 60. How can we expect them to continue working for another 10 - 15 years on top of this.

Many will have to work on due to the poor savings ratio in this country and due to longevity being introduced on state pension, I am glad that I will be long retired and probably dead rather than see the situation and disaster we are heading for. It it like the captain of the Titanic staring at the iceberg.

By the way Merry Christmas everyone let us hope 2013 brings us some much needed stability in our industry. Less tampering by regulators and government alike. We are probably the only ones that can get the Titanic to avoid the iceberg!

report this

Eddy Torsnote

Dec 24, 2012 at 10:28

Beautiful timing from Osbourneezer Scrooge! BAH! Humbug to anyone expecting Christmas Cheer and a fair State Pension in retirement. Particularly spineless of them to try and sink (following the Titanic theme from Bob) this bad news during a week where it is likely to be overlooked by decent people trying to have a Happy Xmas / Holiday. Still that's our caring / sharing politicians for you....maybe the Ghost of Christmas future will have something in store for them!!! Meanwhile Merry Christmas to all you who deserve one!

report this

S. Brown

Dec 24, 2012 at 11:49

There must be a vast number who never get a pension after paying in all their lives like my Dad who died at 61.

report this

alan marsden

Dec 24, 2012 at 11:55

Its a fact that this Government is determined to make the elderly poorer, till eventually they won't have enough money to either feed themselves or keep warm in winter, thus starving them to death one way or another and with the money they save they can give away to other countries. Start by looking after your own first.

report this

Arthur Schopenhauer

Dec 24, 2012 at 12:26

Is this not yet another example of politically motivated current vote catching announcements with only wishful thinking to fund it..

Rather like the FSA "stated objectives" which are substantially different to the "achievements"

Nothing changes by the time they are called to account they have moved on

report this


Dec 24, 2012 at 14:46

There's one angle that no one seems to want to discuss. What are the living standards that the state should be expected to underwrite? Could it be that no one can square the pension circle because there just isn't enough money being saved and no one wants to admit it? To do so means people have to accept less working life consumption and more deferred gratification. How many of your "life's essentials" did your Mum and Dad manage without? This will not (only) be solved by attacking the rich, the government or the bankers - this is about everyone accepting that they need to pay for their own lifetime expenditure with the state providing a safety net for those genuinely unfortunate to face really hard times. If you disagree with me, let me blow all my money now and then spend your taxes, your inheritances on my old age care...

report this

Arthur Schopenhauer

Dec 24, 2012 at 15:34


I think you miss the point It was the government that promised a pension which someone could live on They then promised to add to this with the Graduated Pension and successors to give those above average wage a higher sum ( it will now cost you more in stamps to collect it)

If as you say the State should not provide unaffordable benefits then they should not promise it because the population will believe what they want to believe and absolve them from the responsibility of providing for themselves The result of the deception is the poverty they now find is the reality

It might also be sensible to investigate the divisive structure of the defined benefit pension which is a real rob Peter pay Paul deal designed to enrich those who sign away the company money to fund it. Now these will bust the charities and companies that still subscribe these discredited structures but not until they have bought more gilts so the death is hastened

Lest face it the UK has lost its way we have too many parasites and too few workers. I will not need to abandon my country My Country has abandoned my generation

Last one to leave turn the lights out ( if they still work)

report this

Jane Davies

Dec 24, 2012 at 23:19

David IFA, hypocrisy and discrimination mean nothing to politicians. Steve Webb, IDS and David Cameron spout on about "doing the right thing by those who have done the right thing all their lives" and still ignore the plight of the 4% of state pensioners who remain frozen, their pension stuck at the rate of the first payment, for many less than £10 a week. Not for them a flat rate of £140 or anything near that despite pre-election promises to end this discrimination and despite paying into the NI fund for 40 years same as everyone else. All because they retire to a "wrong" country. For example pension payments frozen in Canada but uprated annually in the USA. Hypocrites and liars describe our politicians and they couldn't care less.

report this

Dave Hill

Dec 25, 2012 at 15:58

I don't really understand this. I've just retired on 170 per week. Does that mean, in the future, someone who has worked all their life I will get the same pension as someone who has been on benefits all their life, and not contributed one penny.

report this

Arthur Schopenhauer

Dec 25, 2012 at 17:23


Lets hope you keep your £170 and it is not reduced to £140 t fund the others Merry Christmas Comrade

report this

Julian Stevens

Dec 27, 2012 at 10:06

In the light if this announcement, perhaps our eunuch of a pensions minister might care to take note of my proposal for the annuity (rates) trap to be replaced by a Retirement Income Bond under which the level of income that may be drawn (with a view to utilising one's fund in its entirety) would be geared (underwritten) according to life expectancy.

report this


Dec 27, 2012 at 10:22

Have to say at nearing 60 I had to take the decision of whether or not to remain contracted out.

So...an insurer's fund performance or a politicians' promise.

Tough one that!

report this

Peter Morris b

Dec 27, 2012 at 14:07

There are already hundreds of thousands of women born in the mid 1950's who have had their retirement plans thrown into chaos because this government brought forward retirement age changes quicker than planned just a couple of years ago. People need some certainty to plan for their retirement not uncertainty and chaos.

report this


Dec 28, 2012 at 11:25

@ Arthur Schopenhauer. There are two separate points but I agree with both. Firstly, I agree that governments of all political colours have made promises they knew couldn't be funded but would come home to roost so far in the future that they (especially they with their completely out-of-touch-of-reality-but-voted-for-by-themselves political pension deals) wouldn't have to face the music. This is standard politics and always has been. It is why Europe is a mess and why the US is struggling to get a budget deal now. Kick a can long enough and eventually it bangs into the wall at the end of the alley - did when I was a kid, and still does. But and here's my point - people who are gullible enough or too head in the sand to work out that these promises are impossible or that politicians always do this stuff deserve what they get. I always advise people that their best adviser is not the lawyer, accountant or us but themselves. If it isn't credible, don't believe it. So if it isn't affordable it isn't going to happen. Perhaps it would help if the cost of pensions - state, doctors, politicians etc were expressed in market value capital sums. It might make folks think about what has to be found from their pocket to pay for all this. The truth is we need to find a way to get the pensions debate on a common and most importantly comprehensible and realistic basis.

report this

Derek Guyers

Jan 02, 2013 at 10:15

I suspect that some of this discussion has gone too deep. The purpose of a pension, roughly, is to pay those too old to work. What "too old to work" means has changed and continues to change and the failure of successive governments (and employers with DB pension schemes) to recognise this fact - by increasing retirement age - leaves us in the present position: people expect a long holiday, paid for by someone else, from 60/65 to, say, 70/75. If you want a holiday, save up for it; if you want to retire then government and employers can help.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Opportunities emerge as production moves back home

As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

A spotlight on Alastair Mundy

Alastair Mundy met Citywire's Daniel Grote at the London Stock Exchange Studios for a detailed interview about the Investec Cautious Managed fund.

Sorry, this link is not
quite ready yet