A slideshow for the CIPP explaining what is happening with the State Pension and what we can do to make sure we get our pension paid in full

1. The state of the State Pension
Henry Tapper
CIPP – Feb 2015

2. The State Pension matters
1. Context: A reminder about real people and pensions
• The importance of the state pension
• The irrelevance of tax relief limits (to most!)
• The low level of contributions
2. Areas for Improvement
• Making the most of the state pension
• State Penson increases
• Policy on state pension age

3. More than half retirement income’s the state pension

4. The majority of occupational pension income is
from the public sector.
• ONS: ASHE 2020 data on 20.2m employees
- Approx 7.4m in DB, overwhelmingly public sector
- Of remaining 12.8m in DC
- 3.5m pay 5%+ of total earnings
- 9.3m pay under 5%
• Latest occupational pension schemes survey (2018) suggests *average* contribution
rates in private sector DC of:
- 2.7% by members
- 2.4% by employers
- Impact of LEL on AE contributions disproportionately impacts low earners

5. What’s happening to the state pension age?
“The state pension age is scheduled
to move from 66 to 67 by 2028
– in the next parliament
Govt. consulting on when SPA moves
to 68 (currently 2044-6 ; could be
2037-9)
but consultants LCP say
“there is no case for increasing it until
2051”.

6. The lack of fertility - the demographic timebomb

7. UK deaths outnumber births for first time in 40
years

8. What’s happening with pension increases?

9. What about the triple lock?
The triple lock is a government
commitment
to increase the value of the state
pension
by at least 2.5% every year.
There were concerns that the pandemic
had caused an artificial boost in wages,
which would have prompted
a 8% rise in the state pension next year.

10. Improving the state pension (what DWP can do)
Resolve past errors quickly – 135,000
people (mostly women) underpaid £1
billion
Ensure everyone checks state pension
forecast (until dashboard) and can ask
questions
Urgent action needed on credits / child
benefit
Promoting and streamlining voluntary
NICs
Chasm between working age benefits and
pension benefits:
Universal Credit *couple* £117.68 per week
Pension Credit *single* £177.10 per week
More people affected as state pension age rises,
including ‘mixed age’ couples
What if you can’t work longer?
Adding complexity to state pension *not*
the answer
What about enhanced pre retirement
sickness benefits five years before SPA?

11. Improving state benefits – (what we can do).
Working age benefits system not designed for
people accessing pensions
Over 1.5m people aged 55-65 on benefit
Strict capital rules
Universal credit - £16,000 absolute cut-off
Council tax help (England) - £6,000 cut-off
Members can’t be expected to understand
pensions, benefits and the interaction
Do schemes / providers need to do more?
See calculator at
www.pensions-and-benefits.uk

12. How to boost your state pension
Many members of LGPS will not have 35
qualifying years for a full state pension
We should be promoting voluntary NICs
https://www.gov.uk/pay-voluntary-class-3-
national-insurance
Current cost 2021/22 is £15pw , £800 pa
Each additional qualifying year
works out to be an extra £5.13 a
week (or £266.83 a year) in
State Pension, based on
2021/22 rates.

13. Pension forecasts; https://www.gov.uk/check-state-pension

14. www.agewage.com
Henry Tapper
henry@agewage.com
07785 377768