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Wednesday, 24 May 2017

People in their 30s and 40s and 50s will be hardest hit by Tory state pension cuts!

Protecting all generations of pensioners
- including today's young people
The Tories are preparing to hit the future incomes of those currently in their 30s and 40s and fail to meet the statutory deadline for responding on State Pension plans.

The main conclusions of the Review into state pension retirement age recently carried out by ex-CBI chief John Cridland was to end the state pension Triple Lock and accelerate the increase in the state pension retirement age. The Government was legally required to respond to the Review by 7th May 2017. They have failed to meet that statutory responsibility.

The TUC responded to the Cridland plans as follows:
  • The TUC opposes Cridland's proposed accelerated increase in the state pension age to 68 between 2037 and 2039. Under the 2007 Pensions Act this was pencilled in for 2044 to 2046. Substantial inequalities in life expectancy and, particularly, healthy life expectancy mean this policy will hit the poorest hardest. 
  • The TUC does not support the downgrading of the triple lock that currently governs rises in the level of the state pension in favour of an earnings link. The triple lock has been gradually bringing the state pension back up to a reasonable level. And its work is not done. The greatest potential beneficiaries of this policy are today’s young workers. There doesn't need to be a trade-off between pension age and the level of the state pension. 
The TUC view is that both these measures would, in practice, hit the future incomes of those currently in their 30s and 40s. This Generation X is already the worst placed of the generations in terms of workplace saving. And the poorest of this generation would be affected the most. For they are the least likely to be able to work into later life or have the substantial savings needed to cushion retirement ahead of state pension age.

In considering other input into the Review it was noted that Government Actuaries had projected 'viable future increases in retirement age to 69 and 70 by 2055'. This had not been included in the Review Report and the Government have refused to comment. However people need to 'watch this space'. The Tories see the state pension as a source of further 'savings' above and beyond the £8 billion clawed back in the value of state pensions since 2010. Doubtless this then allows them to further reduce taxes for their backers such as through further Inheritance Tax cuts that benefit the wealth.

Eddie Spence
ARMS Vice Chair

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