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NAPF calls for state pension age to be linked to life expectancy

The National Association of Pension Funds is calling for the state pension age to be indexed to longevity.

Chief executive Christine Farnish told delegates at Cityforum’s Pensions Crisis Resolved conference in London last week that an advisory body of actuarial and mortality experts should be established along similar lines to the Bank of England’s monetary policy committee. It would control when and by how much the state pension age is increased.

Farnish said a state pension age is needed to provide people with the security of knowing when their state benefits will begin. She advocated raising the state pension age to 70 by 2030 and pegging it to longevity thereafter. Anyone who cannot work to 70 or who is in poverty would be supported by means-tested benefits under the NAPF proposals.

Independent pension policy adviser Ros Altmann said she preferred a flexible approach and pointed out that raising the state pension age to 70 would disadvantage the lower social groups, given their shorter life expectancy.

Farnish said the difference in life expectancy between the top and bottom ends of the social strata has shrunk in recent years, due largely to falling smoking rates.

She said Government Actuary’s Department tables show that, at 65, a male in social class one is expected to live until 86 while a male in social class five has a life expectancy of 81 years.

Watson Wyatt partner Alan Pickering told the conference that increased working class lifespans are one of the reasons why the state pension system is under strain.

Farnish said: “We would like the decision on the state pension age to be taken out of politics and have an advisory body analyse mortality data. The retirement age should also be indexed to longevity.”



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