UK - Unrealistic expectations about pensions benefits are bringing the system into disrepute, the head of the government's simplification review warns.
Alan Pickering - the previous past chairman of the NAPF - claims expectations are raised when people begin to make comparisons with their parents and expect to retire at a similar age with similar benefits.
Pickering believes today’s generation forgets that their parents generally began work at a much earlier age and will have a lower life expectancy.
This, he says, means that people starting work today have dangerously optimistic views of their retirement.
Pickering said: “These unrealistic expectations can lead to the bringing into disrepute of any sort of pensions system. If your expectations are unrealistic you blame the system rather than your expectations.”
Pickering believes government initiatives such as the combined benefit forecast statements can change people’s expectations.
However he also noted that the government could help further by increasing the state age of retirement to 70 from – for instance – 2030 onwards noting that this was the age that Lloyd George set in 1908.
Pickering added: “If 70 was a sensible retirement age then, 65 can’t be a sensible age now given the greater life expectancy that people have got now compared with 1908.”
Increasing the pension age could be controversial, but Pickering notes that other items of government expenditure – such as education and health – might be more important than providing pensions to those who could easily work longer.
Pickering concluded: “Society doesn’t really have a role to pay a guaranteed income to somebody who is young enough to work, fit enough to work and for whom work is available.”
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