Scots to lose out in Westminster pension reforms

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  By Anne-Marie O’Donnell

Scots can expect to have shorter retirements than people in the rest of the UK due to pension reforms being brought in by Westminster, research has revealed.

A study from the Pensions Policy Institute (PPI) warned that variances in life expectancy in different regions of the UK meant people living in England would spend more of their lives in retirement than people in the rest of the UK, with Scotland lagging further behind than Wales and Northern Ireland.

The study detailed the age at which workers in the UK could expect to retire at in order to spend a third of their average life expectancy in retirement.  According to the research, by 2019 workers in England retiring at the age of 67 can expect to spend one third of their lives in retirement.

However, workers in Scotland are not estimated to have reached that level of life expectancy until 2033, meaning they would spend less of their lives in retirement than their English counterparts.  The government is planning to gradually increase the state pension age over the coming years.

The PPI report stated: “The trigger year in which the SPA would need to increase to 69 to avoid more than a third of adult life being spent in retirement ranges from 2045 (England) to 2057 (Scotland).

“It is unlikely that there would be different SPAs for different areas of the UK as this may be unpopular and would be difficult to administer.

“If there continues to be one SPA throughout the UK, individuals in Scotland, Wales and Northern Ireland, who retire at SPA, may spend a greater proportion of their retirement in ill health than individuals in England.”

The report added that figures from the Office of National Statistics (ONS) suggested that life expectancy was higher in the south of England than the north of England, meaning workers in the far south of the country could expect to enjoy longer retirements than elsewhere.

Kevin Stewart, SNP MSP, said that the research was evidence that Scotland needed its own powers over pensions.

“This research shows exactly why it is so important for Scotland to be able to set our own pensions policy,” he said.  “Labour and the Tories have used improved life expectancy as the driving force for accelerating the rise in the pension age.

“The Scottish Government is taking strong action across a range of public health initiatives to keep improving Scotland’s life expectancy figures, but the reality at present is that Scotland does not have the same life expectancy as the rest of the UK and a one size fits all pensions policy simply cannot reflect Scotland’s circumstances.”

He continued:  “Older people in Scotland spend a lower portion of their lives in retirement than those in other parts of the UK – a fact that Westminster simply fails to take into account.”

The study also found that pensions in Scotland are currently six to eight per cent less expensive under the current scheme, and that there will be a transfer from Scotland to the rest of the UK of nearly £50m per year by 2020.

“Social protection costs represent a lower share of tax revenues in Scotland than for the UK as a whole – meaning pensions are more affordable for Scotland – and polling in recent days has confirmed that people want decisions on pensions and welfare to be made in the Scottish Parliament rather than by Westminster,” Mr Stewart added.

“Where Westminster has decimated pension schemes and is rushing ahead on an accelerated timetable that will see the retirement age rise rapidly, a Yes vote in September will ensure we have a pensions system that is right for Scotland.”

The UK Government unveiled its plans for pension reform at the beginning of last year. The changes aim to streamline and simplify the way the state pension is paid, although some critics warned that by the time today’s schoolchildren retire, more than half could be worse off than they would be under the present system.