A very warm welcome to our second panel for this evidence session on the transition to state pension age inquiry. It is a pleasure to welcome Patrick Thomson from the Standard Life Centre for the Future of Retirement, Andrea Barry from the Centre for Ageing Better and Ben Franklin from the International Longevity Centre UK. A very warm welcome to you all. I am going to kick off, and my questions will follow on from the previous panel in relation to the Pensions Commission. Would you comment on the commission’s overall remit and the challenges it may face, particularly in delivering the objective of a strong, fair and sustainable pensions framework?

It is good that the commission has a broad remit; the original Pensions Commission in the 2000s had an equally broad remit. It faces challenges in terms of balancing the trade-offs across its remit, and where this discussion may go today is about how we weight those different elements. For example, if we build a really sustainable system, that could also undermine and limit fairness, particularly for those groups that may not reach state pension age in good health and who therefore leave the labour market early. It is also worth thinking about how different the world is now to what it was 20 or so years ago. Pensioner poverty has declined, though there are signs of an uptick, particularly for pensioners who are renters. The Government’s fiscal situation is much more precarious now than it was 20 years ago as well. The sustainability arguments are really strong in terms of why we need to act, and act relatively soon. In addition, we have high levels of long-term sickness among the over 50s, and that has elevated—particularly since the pandemic—with 3.5 million people aged 50 to 64 inactive and out of the labour market. These challenges are substantial, so before we take action, we need to think carefully about how we balance the different parts of the remit. My argument is that the most serious and urgent issues are around the long-term sustainability of the pension system. There are a couple of key points; debt to GDP is still rising and it is going to continue to rise to around 100% of GDP towards the end of this Parliament. Our debt interest payments are increasing, so understanding how we can get to grips with pension spending over the medium to long term is really important. Having said that, it has to coincide with action around supporting longer working lives to ensure we do not just swap one benefit for another.

Thank you. Andrea, is there anything that you want to add to that?

It is really important for us to consider the distinct inequalities that exist within the 60s age group. This group have been impacted by many policy changes at different ages, and unfortunately, the information around those changes has not always got through. We have carried out a lot of qualitative interviews with people in their 60s; some did not even know that they could have asked for what was called a midlife MOT with their employer to discuss their savings and retirement options. Some are still unsure how much they need to save and how much they will need in retirement. That information, like the issue of inequality, will be really important for the commission to consider. I would echo Ben’s comments about the inclusion of work. Work is really important when thinking of pensions and retirement. A lot of people now are saving with their employer, but this age group were a bit late for the enrolment period. They were in their mid-40s and 50s, so when you are looking at their long-term savings, many of them missed that boat. We want to make sure they do not miss the boat when it comes to another inquiry into the state pension.

Those are good points. Let us turn to you, Patrick.

Thank you for having me. We very much welcome the Pensions Commission. We think it is a great opportunity; we are living in a different world from the first Pensions Commission 20 years ago. I also like the time remit of this commission, which is looking forward to 2050. We are the Centre for the Future of Retirement, so we are really interested in what retirement is going to look like over the coming decades. We know it is going to look quite different, so even though the original Pensions Commission had fantastic policy successes—the introduction of automatic enrolment was hugely significant in bringing in millions more savers at a time when we were seeing declines—the challenge for this commission now is to make sure that people are not only saving but saving enough. We think it is very good that they are focusing on adequacy—mostly on the private saving side—but they also are conducting an independent review of the state pension age, because those two factors definitely interact. We know that in this age group, around 40% to 50% of people are under-saving for their future retirement. As Andrea has said, there is a generational gap; this age group came into work before automatic enrolment was introduced and did not benefit from the more generous defined benefit schemes, or final salary schemes. For those we think of roughly as Gen X—people in their mid-40s up to 60—and even those directly above them, there is definitely a savings gap. We have also done a fair bit of work on pre-retirement poverty in the age group from early 60s up to state pension age, which has seen some of the largest rises in relative poverty rates among all adults. A lot of that is due to the rise in the state pension age. So yes, we certainly welcome the commission’s work and feel that it is timely.

Just sticking with this, you probably heard the question put to the previous panel about adequacy and the state pension. It is not explicit within the terms of reference that the commission will look at state pension age but do you agree that it should, as the other panel did?

Personally, yes, I absolutely agree. It is a huge part of what happens in terms of adequacy and sustainability; the combination of uprating and the state pension age is a crucial dimension to what that will look like over the next 10, 15, 20, or 30 years. It is a very difficult exam question to answer if you do not think of all those elements—if you do not think about what the state pension age is going to be, how might it rise in the future, and about the generosity of the state pension itself and how it is going to be uprated. We need to think of this in the round, not only in terms of the sustainability question but in terms of what individuals are receiving through both their pre-retirement income and their pensioner income, and how that interacts with a range of other things. The Pensions Commission would seem to be the obvious route to do that. We have already heard about the impact of housing from the previous panel, but this also interacts with work and people’s income in working Life in short, you do need to look at it in the round.

Andrea, would you like to comment further on the extent to which pension policy has supported people who are now approaching pension age to save for retirement, which you started answering to my first question?

Pension policy can really help people when they are looking at saving for retirement. Again, I am going to home in on the question of information: we find that many people in social housing know a lot about their pensions, they know what they need to save because they are connected to the system. They might be interacting with the benefit system already, and there is information from the DWP on what they need and what retirement might look like for them. The people who do not have this information are people who are privately renting and, to an extent, homeowners, because they are not directly connected to a system that provides good sound advice on saving. Some do not feel that they can get that information from their employer. There is a question of whether the employer is a financial advocate that can help them find out what saving and what a pension looks like for them. Employers can provide options for pensions and for savings, but they cannot necessarily provide the detail about pension policy that the Government can provide. A lot of people trust the information that Government provides. So there is a divide based partly on housing, which means also by income, but in a different way than you would expect.

As we discussed in the last panel, life expectancy is not improving as much as it was expected or projected to improve. In particular, there are some very sharp regional variations. What implications do you think that has for the state retirement age?

You are absolutely right: there are huge spatial inequalities in the UK; we are one of the most unequal countries in the OECD when it comes to income and health. Healthy life expectancy can vary by around 20 years, depending on which part of the country you live in, so it is an absolutely key question in this debate and policy arena. There is a trade-off between potential sustainability gains and fairness. If you increase the state pension age, or you reduce the generosity of the pension, that is inevitably going to exacerbate the inequalities that currently exist within the system. Somehow, we have to balance against that. Now there is a question about whether that is a role for pensions policy per se, or whether it is more about the welfare system, or having a more active labour market policy around skills and retraining, or an industrial strategy that supports the work and talent pipeline for older workers. Other countries are doing things around the flexibility of pensionable age. Denmark, for example, enables people who cannot continue working to claim their pension six years before pensionable age. There is not only an automatic mechanism to increase the state pension which it reviews every five years based on life expectancy at 60, but there are also early access mechanisms. It is not just the responsibility of pensions policy to deal with inequalities, but there might be some adaptations that could be taken to deploy flexibility within the system.

The big picture is that the state pension in its modern form has existed since the Second World War, and for the first 60 years the state pension age of 60 for women and 65 for men did not change. Thus, for most of its existence, the state pension age has remained the same, despite rising life expectancies for both men and women. Since 2010, over a condensed period of 15 years, we have seen the equalisation of pension ages for men and women, and rises in the state pension age. In some respects, we have been catching up with those previous life expectancy gains. That is one fact to consider; if you have very rapid state pension age changes and rises, that can create challenging situations for certain groups in how they work, save and retire. The numbers will tell you one thing, but we have also done a good amount of in-depth, often deliberative research, where we talk to people to understand what they are thinking. We also bring in experts and people with lived experience. We have held workshops across the country with hundreds of members of the general public, asking them what they know and understand about the state pension. Unsurprisingly, it really matters to most people. It is an important bedrock for their financial savings, and most people think of adding to it through private saving as well. Once they have been through that deliberative process, once they know more about the state pension and its history, many people accept the need for a state pension age rise. They are not necessarily happy about it, but if it is done in a fair manner, within and between generations as well—sometimes easier said than done—they are willing to accept it.

I would add that labour market challenges across the country mean that state pension age rises are not going to hit all areas equally. That is very clear. In certain areas of the country the state pension will be extremely important because people might have been out of work for a long time and have not been living a healthy life. They had to leave work early or they did not have access to a good labour market, and that means they are unable to cushion themselves against a shock. Health problems are a shock; if you have a good job, that shock can be cushioned: you can be accommodated at work, you can find a role that allows you to work flexibly, keep working longer and continue to boost your savings, so that when you get older, when you get towards state pension age, a further rise will not necessarily harm you. Unfortunately, there are areas of the country where that is less likely to happen. When the state pension age is rising, those distinct communities need to be spoken to in such a way that they will understand that this is not just the result of one policy change; it is 20, 30, 40 years of policies and decisions. Things have happened to them that are not necessarily their fault, but mean they possibly need to make some mitigations to make sure that they are not again on the short end of another policy shift.

That is a really important point. We have published a report called “The UK Better Lives Index” which taps into exactly that issue. In some parts of the country, half the population aged 50 to 64 are economically inactive, either out of work or not looking for work; if you raise state pension age and you do not increase working-age benefits, then you are going to increase pre-retirement poverty among that age group. It is really important that we take into account both working-age benefits and active labour market policy to support people to come back to work, particularly in those parts of the country that are going to be most affected.

The IFS issued a report on women last year, or maybe earlier this year, which said that a lot of women leave work early because they have certain information, they make a decision based on that information and then the information changes, the assumptions change and they have to make a new decision. Relationships break down; we came across that in our long 60s project when we talked to people about the challenges they faced with retiring in their 60s. Often it was because a relationship had broken down and they found themselves single. They no longer had any additional income from a partner; that disproportionately impacts women, who have 48% less retirement income than their male counterparts. They may have been out of work for five years; they made a decision to leave and now they need to find a job. Unfortunately, the labour market is not age-friendly, and if you have been out of the labour market for a long time—no matter your age or your gender—it is very hard to get back in. While I am on my soapbox, employment support does not always help people of that age to find a job. Q26            John Milne: The challenge for the state is that the cost of the state pension is rising. The IFS has suggested that one solution to that would be less generous indexation; to be fair to it, that is part of a package of other things. What is your reaction to that suggestion?

In terms of sustainability the challenge is strong, as I argued at the beginning; it is really important that we find ways to keep a lid on pension spending, not just because of the sustainability of government spending but also because it eats at other budgets within Government. The education budget has been frozen over the course of this Parliament; spending on pupils per head is actually going to fall in real terms. Defence is barely rising but health care spending and pensioner spending are continuing to rise, so it is an important challenge. The question is, how do you keep a lid on it? What mechanism do you use? There are a number of different ways: you could anchor on maintaining and sustaining the proportion of GDP spent on pensions at around 5% to 6%, for example, to maintain current levels, but maybe with scope for some modest growth. You could also anchor on a third of life being in retirement, as we have at the moment. That is one option. We have explored what that actually means in terms of a pensionable age, and we estimate that it would make it around 70 by 2050, according to current life expectancy. Or you could have a set number of specific years; you could say that retirement should be 20 years, and then you use life expectancy gains to shift pensionable age on that basis. Obviously, there are questions about how you operate; the earlier panel and Jonathan mentioned the problems around the triple lock and how uncertainty and volatility add substantial and unknowable costs. By the end of this Parliament, those costs will be an additional £15.5 billion per annum to what was previously expected. That is clearly not a sustainable mechanism going forward, but we need to choose a mechanism to anchor on and justify what that is. Hopefully, the Pensions Commission can come out with some ideas about what that might look like and how it can be made fair. Increasingly we will spend more than a third of life in retirement and we have an ageing population; that feels very unsustainable.

Going back to the previous point, I would agree that if the Pensions Commission is looking at adequacy as a whole, it would be good to include both the private saving element and the state pension. Ultimately it is important to find out if people have enough to live on in retirement. It also comes down to what we think the state pension is for; as we found in our research with members of the public, it plays a lot of different roles. It is certainly important in preventing pensioner poverty, but people also think of it as something they have paid into all their life and that they are expecting to get something out of, so there is a circular dimension. People also think of it as a way of allowing them to have a retirement and to stop work, so it can play all those different roles. But we have to think about the policy and intent of it in terms of the fiscal picture as well; if we think of it in the round, that is helpful.

I am always cautious when talking about the triple lock because in one way it has been very beneficial for the people who needed it, who again, did not have that cushion; the triple lock was very successful for them. However, we recognise that it is a lot of money, and as the IFS has said there is a lot of volatility to deal with. I am going to say again and again that if you are going to look at changes you cannot look at the triple lock in isolation, you cannot look at pensions in isolation, you have to look at it as an entire system of changes. You should be looking at why certain people, compared to other groups, are reliant on that system, reliant on benefits and the state pension payment. You should make sure that if you are going to continue to look at the adequacy of the state pension, some mitigations are provided for them.

I am really happy to start. Everyone in their mind has an idea of what retirement age is. For some people it is not the age at which they stop working, so the end of their working life might be a longer period of time than we expect. Those currently in their 60s are working longer, they have to work longer; unfortunately, the least wealthy are not working longer, they are reliant on certain benefits to keep them going until they get to state pension age. But those who are working longer either choose to or they have no choice, and we want to make sure that they have the choice. Some are going towards self-employment because the labour market is not age-friendly; they are making opportunities for themselves. That is not something we have discussed yet. Some are in a precarious situation where they are in privately rented housing, they are unfortunately in poverty and so they are going into work. That is how I would set the tone when looking at that age group.

At ILC we have done an enormous amount of work on older workers. It is critical that we start to think about older workers as an absolutely crucial dimension of supporting supply-side growth. We are crying out for shifts and improvements in supply-side growth; we still have an inflationary environment; we have an ageing population. This is not just a UK problem, this is across advanced economies; we need to think about how we are going to boost labour market supply going forward, and we have substantial scope for improvement in this context. For instance, if we look at Sweden’s employment rate for the 55 to 64 age cohort, it is about 10 percentage points more than the UK. If we equalised with Sweden, if we matched its rate, we would add around 2% to GDP, or £78 billion pounds. So this is an enormous opportunity in terms of the UK economy. What I would say is that we are not really looking at this from a policy point of view. Alan Milburn is leading a NEET strategy, that is coming out soon, for young people who are not in employment education or training, and that is absolutely right. There have been proposals around construction and hospitality. We did an equivalent older workers strategy; the last one was way back in the mid-2010s. We need to revamp that now and think about how we can design job centres and promote an active labour market policy, as I was talking about earlier, both to prevent exit but also to bring people back into the workforce who may be 10 years or so away from reaching the relative safety of pensionable age and having a state pension.

I would agree that this is probably the most crucial question. The way to address the rising state pension age in the long run is to think about how we can make work better for more people in their 60s. We have researched what we call the retirement expectation gap. Most people in the UK say that they would like to retire at about the age of 62, but they think they will be able to retire at the age of 67; so most people need to work for longer than they would like to, and for some groups, the gap is much wider. If you look at renters, for instance, they say their gap would be about eight years. There is a lot that we can and should be doing. People working in their 60s are quite different; they face different opportunities and challenges. If you think back to the impact of covid, at that time many people, particularly older workers, left the labour market. Often, they were pushed out of work due to factors related to the pandemic, but some people looked at their work and thought, “Actually, there is a lot about this I don’t enjoy.” More people now have defined contribution pensions and can begin to access that source of pension wealth as a way of exiting the labour market early. It is probably not the best thing for their long-term retirement savings, but they have that option. That is probably a good challenge to employers because people have another way out, they have options; we need to be doing more to support workers of all ages. Both Government and employers have made great strides on flexible and part-time working. We know that this is one of the big things helping people in this age group to be able to work longer. We also know that better support for carers can be a really important factor. We think paid statutory care leave—it could be five or 10 days—would make a big difference for this age group and help them to work for longer.

Sweden and the Scandinavian countries are good examples of where flexible working often works well. But if you look at other advanced manufacturing countries, for instance Germany, they provide mitigations and flexible support in the workplace, in particular to enable those with health conditions to work for longer; there is certainly much we could learn from other countries. It is important not to think about this as being just a cost or a drain on the economy. For the coming decades, this is absolutely going to be one of the driving forces for the economy. We did some work looking at the demographics and age profile in the industrial strategy sectors, which are high growth sectors within the UK. Interestingly, we found that their workers were older than average and those sectors had aged the most over the last decade. Sometimes it is about busting stereotypes about people’s typical image of someone working in a high growth, high tech sector. These are often people already in their 50s and 60s and more support for them would help us all.

The Mayfield review and the Keep Britain Working initiative is going to be crucial. What was so important with the Mayfield review is the fact that we are going to implement big changes by supporting people to remain in work for longer. Economically, for many millions of individuals, that will make a big difference. I will declare an interest; I work for Standard Life, which is part of the Phoenix Group, and we are one of the vanguard employers ourselves, so we take this incredibly seriously. Doing this through businesses and employers is the route to change. It is about the culture within the organisation, but also about making sure that people have adaptations and flexibilities. The more challenging part, which is also very important, is how you help people return to work. We know that over-50s in employment support programmes have among the worst outcomes. It is a more challenging picture, but it is certainly worth doing. I just want to stress, this is about helping people to work for longer, whether they have health conditions or caring responsibilities, or whatever the challenges might be.

I aggressively agree with Patrick on a lot of this, and I suspect Andrea does too. I will try to be brief, but there are probably six things I want to touch on. First, which we have not spoken about much but is really important, is around skills and adult education. I do not see any big prioritisation in terms of increasing investment in adult education, but it is really key. In terms of looking at international examples, our efforts around adult education and technical education are pretty woeful. It is really important that we align work and health interventions, and that we are supporting older workers—to be fair, all workers—into good jobs, not just any jobs. There is some interesting regional work on this in terms of aligning job centres, healthcare services, and advice providers, so that we have co-ordinated joined-up systems to support people rather than different parts of the system working in isolation. That is probably even more relevant for older workers. Patrick has already mentioned stronger rights around flexibility. I actually think that the Government’s work around workers’ rights has improved this, but we still only have the right to ask for flexibility and we cannot go beyond that yet. Are there ways to strengthen that? We should absolutely look at paid carers’ leave. There is carers’ leave, but it is unpaid, so people are financially penalised for caring. As a result, that actually pulls them out of the labour market altogether. That is really important. The Mayfield review was great in terms of touching on the problems, and having these vanguard employers is great, but we are waiting a long time before serious action is taken at a policy level and that is frustrating. We can do more by learning and scaling what works across good employers. We are currently working with Veolia, which is an environmental services organisation, to understand what their demographic pressures are. That is really interesting because these are frontline roles. We spoke about industrial strategy in some frontier sectors, but we are also talking about foundational industries here, and how we can design jobs that support people in physically demanding roles; a high proportion of those in environmental services are over the age of 50. Having a strategy to understand what the talent pipeline looks like in those businesses, knowing what works and then scaling that to other similar businesses, is really important. There are pockets of good behaviour and good employer activity; we have to bottle those and tell this story more broadly across the economy as a whole. That goes beyond just the vanguards, even though the vanguards are important.

On the vanguard issue, I would just mention that we have what we call our Age-Friendly Employer Pledge. This comprises over 560 employers who are working with our organisation to look at best practice and employer engagement. They have case studies and they get access to really good evidence on how to ensure that older workers are supported within employment so that they can stay and retain their role. They have something called the midlife review and the midlife MOT, where they have those conversations. That was mentioned in the Mayfield review. Actually, we found out during the review that eight of our employers are vanguards. However, those are employers who are interested and really excited to do something. Unfortunately, there are some employers that, due to misinformation or lack of information, think it is too expensive and will be too difficult. Some are SMEs; they are concerned about the bottom line, they are concerned about growth, and they feel they do not have the necessary tools and ability to ensure an age-friendly environment. Some vanguards have exceptional HR systems that mean they can track and really understand how people are supported in the workplace, and some SMEs do not have that. They are not fully aware of what best practice would actually mean, and so they have decided it is not possible for them. Ensuring that supporting older workers is a possibility not only within the vanguards but also within SMEs would be extremely important when working with employers.

Thank you so much. Amanda Hack, we have 15 minutes left for this session.

Thank you, Chair. In the context of employment before retirement, do you think there is anything we should have learned or should be learning from the previous increases to state pension age? How might future increases to state pension age be managed better in terms of pre-retirement employment?

I am happy to go first. We have seen state pension ages rising since 2010, so for over 15 years. We now have quite a lot of good data and good evidence on the results and we know with some certainty what is likely to happen next. We know that when you raise the state pension age more people work for longer and delay retirement, but crucially not everyone does. It does not automatically lead to people being able, or wanting to, work for longer. It is those groups who are left behind and who face a wider gap to their state pension who are finding things most difficult. It is particularly challenging now as more of those groups are under-pensioned. Sometimes they have only a defined contribution pension, or no pension at all, and they have to grapple with quite difficult decisions in that interim period. Obviously, this saves public spending quite considerably. This next rise to 67 is forecast to save public spending £10 billion a year, which is a significant amount of money, but that does not come cost free; it comes directly from people, from 66-year-olds no longer getting their state pension, so that is where the big impacts really hit. It leaves everyone slightly less financially secure as they enter retirement, but for some groups particularly, it can lead to actual hardship. The last time we saw the state pension age rise it doubled the rates of relative income poverty for the affected age group. So the policy question is: knowing with some certainty that there is a group in society whose rates of poverty will double in the next few years, is that the best policy outcome we can hope for? It is also important because we know this is going to happen. It is not an unforeseen recession or spike in the cost of living, it is not another pandemic that we cannot plan for; we know who it is going to affect and when, even to the month. It is really important we go into this with our eyes open, and we make plans and mitigations where appropriate. A lot of those mitigations might be in the employment system, helping people to work and stay in good work for longer, but sometimes it might be specific targeted mitigations at people who are facing the most difficulties in weathering that gap.

Do you think those individuals who are going to be impacted are sufficiently aware, and have they been able to plan for this?

That is a really crucial question. We have done some research on the general awareness of what people think the state pension age will be, and there are sometimes serious mismatches with reality. A lot of this comes down to the fact that since 2010, the state pension age has changed more years than it has not, so that leads to confusion for people. The more you can simplify the system and have well-communicated numbers, as rounded as possible, and target people who will be affected, so much the better. For instance, fewer than one in five people of all ages can correctly identify the current state pension age of 66. It gets better for people in the 10 years beforehand: 80% of people aged 55 to state pension age can identify the state pension age within a year. But building up to the next rise, what is concerning and surprising for me is that when we asked people what the state pension age would be by 2030, many of them did not know the correct answer. Many younger people still thought it would be 60 or 65; significantly, about a third of people thought it would be 70 or more. That could be through a lack of trust in the system, a lack of education, awareness, whatever, but people do not necessarily know what is coming. People’s awareness improves as they approach state pension age, but for some people that might be too late to change their financial plans or their careers. These are things that you need to look at in the long run and help people plan, sometimes over many decades; the earlier you can communicate with them, the better.

As I understand it, the review is looking at those fairness factors very strongly. Questions around the geographic and spatial inequalities that we mentioned earlier are likely to be a prominent feature. For me, what is important is that we acknowledge and think about how we mitigate those challenges. There are factors that will need to be taken into consideration from a fairness point of view, which are absolutely crucial; we have mentioned many already today, but those factors should not delay the increase in state pension age. Due to life expectancy increases it is critical that we have a sustainable system going forward and that we can communicate that to the public, giving as much notice as possible of any changes that are to come, as well as the degree of uncertainty in which we hold some changes because life expectancy projections change, especially over 20 to 30 years.

It forms part of my evidence submission to the State Pension age review. We should be looking to other systems that seem to be solving this problem. The original Pensions Commission helped put us on a sustainable footing; we have auto enrolment as a result, so we can lean on a strong private savings pillar. We have the new state pension, which is better than the old, and we have managed to raise pensionable age successfully in the past without there being a huge political outcry. None the less, we could potentially do better, including by looking to examples such as Denmark, which has built-in flexibility through an automatic review mechanism every five years based on life expectancy at 60. That is a really interesting model we should consider. There are also more radical options. Sweden, for example, has something called a notional defined contribution system, which effectively works like an annuity for individuals based on what they have contributed over their working life and can be accessed between the ages of 63 and 69. The time at which they access that obviously determines how much they will get during retirement, but nevertheless, there are built-in degrees of flexibility within it. The generosity depends on life expectancy and broader fiscal constraints as well. So there are interesting and useful models that we could provide in terms of framing the options that the commission could consider.

I am not over the specifics on what that might be. There might be some examples, but we would have to get back to you on what they look like. If you want us to, I would be happy to do that.

A lot of these suggestions are tied to work. For instance, one of the options was that you get a proportion of what you put in over your working life. So once again, if we have these increases to state pension age, and that possibly continues over the next 30 years, we have to make sure that the protective effect of work is retained and improved upon so that the labour market can help people ensure they have options when they get to this age and that if the pension age keeps increasing, people are not cut out of a healthy retirement. At the Centre for Ageing Better, we just want to make sure people can age well. That ability to age well is the ability to be in work when you want to and leave work when you want to as well.

I would just comment on the overall picture of what the independent review should be looking at, and then on which aspects the Government should respond. There are really three tracks: there is a very short term track that runs from now until the state pension age begins to rise next year. We need to prevent increases in poverty for the age group most directly impacted by that. They might be people who are out of work in the years before state pension age, those with health conditions who are unable to work, or carers. The IFS mentioned ways of changing elements of the working age benefit system through universal credit, which could be worth exploring. The medium track is about making sure everyone is aware of upcoming changes and can plan for their futures. The longer track is about putting in place things from the Keep Britain Working review, changing working patterns throughout people’s 60s, helping them to work for longer and improving their working lives, whether through the industrial strategy or other Government support. Ultimately that will help individuals, but it will also boost the economy as well. The final point to make is that when the state pension age rises, it is forecast to reduce public spending by £10 billion, but that is obviously money that does not come out of the blue. It is a very tough fiscal environment at the minute, but you could think of targeting some savings to help invest in all these things, and ultimately, in the long run, both Government and society would benefit.

Given the fact that the state pension age will increase next year, what mitigation can be put in place now in order to accommodate that increase next April?

Of the three strands, that is the most difficult one. There is a very short amount of time, and a lot of this is already bedded in. The DWP could look at tweaks or changes to the universal credit system in the years leading up to it; the IFS suggestion also has some merit. But it is a very challenging question. I suppose the main thing is making sure that the changes are known and are communicated, at least in that short window. But for many people the amount of income they have is already baked in. It is a really challenging issue.

I would add that it is important to make sure not only that those changes are communicated but that where there is support, whether that is debt advice or the Pension Wise-type advice about understanding the options with regard to people’s own wealth and savings and assets and how they could use them, those handoffs are clear and that those services are available and accessible. Linked to that is the new support regime that is being built through the Financial Conduct Authority to provide tailored guidance based on model portfolios for different individuals to help them with those really critical decisions that they are going to have to make over the next year or two. That framework is not full financial advice; sitting in the lower tiers works really well, not just for middle and high net wealth but lower wealth and lower income groups as well.

I would say that we recognise that the state pension age is a blunt instrument. We can possibly incorporate the potential social impact of the state pension age changes into our policy decisions as well. A simple example is uprating pension credit or allowing it for a part of the pre-pension age. It is a fraction, less than 1%, of the savings you would be making and it would help people to withstand pre-pensioner poverty as well.

One final point is the need to think about the wider picture. If unknown events occur over the next few years—for instance we enter an economic downturn or something similar—we need to make sure those things do not interact. We should be thinking about better redundancy support and a whole range of other things that we could be doing in the wider system to support people in this age group, particularly 65 and 66 year olds.

Thank you so much to you all. That concludes our evidence session for the transition to state pension age inquiry.