Turner report recommends raising state pension age

The pensions debate looks set to rage on through 2006, following the publication late last year of the second report from Lord Turner's Pensions Commission. The report set out recommendations for a 'new pensions settlement for the 21st century', including controversial proposals to raise the state pension age.

The report argues that increasing the state pension age is an 'unavoidable long-term trade-off' in order to balance required public expenditure against demographic changes arising from increased life expectancy and 'falling fertility'. Increasing SPA would create 'in essence a higher pension at a later age'.

The Commission states that 'if the rise in SPA after 2020 [when women's SPA becomes equal to men's, at 65] was in proportion to rising life expectancy, it would rise to about 66 in 2030 and about 67 by 2050'. However, the report also sets out further potential scenarios for raising SPA, including one in which SPA could rise to 68 by 2050, and another in which the second state pension age could rise to 69 by 2050.

Other key recommendations include establishing a National Pensions Saving Scheme 'into which all employees without good existing provision would be automatically enrolled but with the right to opt out'.

The Pensions Commission was established in 2002 to investigate actions that could be taken to address the worsening pensions crisis. Its first report, published in October 2004, called for a comprehensive policy focused on the long-term stability of the pensions system to counter the effects of demographic change and inadequate savings.

Key findings from the second report were leaked in advance, generating a frenzy of press speculation regarding both the proposals on raising SPA, and the possibility that Labour might choose to ignore the Commission's findings entirely.

Turner has subsequently announced that a scaled-down Pensions Commission will continue to exist until March 2006, when a third report will be published, designed to answer critics of his proposals. Turner states that 'at the end of March we'll produce a slim sign-off document, responding to the various discussions we've had and clarifying some points'.

  • Pensions Commission release second report and A new pension settlement for the twenty-first century: the second report of the Pensions Commission    Read the official press release and download the complete text of the report from the Pensions Commission website.

  • Brown uses Turner report to reopen public sector pensions
    • row, Government to honour public sector pensions deal;  Pensions report published, Pensions Commission sees 68 as the retirement age by 2050   and Turner plans further report on pensions   Personneltoday.com reports.

  • Official reactions: TUC ;GMB and CBI  Read initial reactions to the report on the TUC, GMB and CBI websites

    Also

    Turner report is a timely reality check on the state of pensions    By CBI HR policy director Susan Anderson, writing in Personnel Today.

    Government challenges insurers to come up with Turner alternative, Fears raised over IT delivery capabilities and Bill promotes idea of pension facts in job ads    Personnel Today rounds up the key developments in the immediate aftermath of the Turner report.

    Lord Turner calls on employers to engage in pensions debate and In defence of compulsory pension contributions    Personnel Today reports.

    Pensions Commission consults on pensions crisis and Consensus for state pension reform    Read XpertHR's coverage of the Commission's first report, and of reactions from pensions industry stakeholders.

    Labour's third term agenda    XpertHR looks ahead to the employment agenda for Labour's third term, including the manifesto commitment that the third term would see the 'design of a pension system that has the basic state pension at its core', to give 'special help to the poorest' and 'provide incentives to save for hard-working families whatever their wealth or income', signalling a possible move away from the current system of means-testing.

    Pensions compulsion could be imminent, taskforce warns   The report of the Employer Task Force on Pensions warns employers that if private pension provision cannot be made to work, the government will introduce higher taxes and/or compulsion.