Julie Cooper – 2016 Parliamentary Question to the Department for Work and Pensions
The below Parliamentary question was asked by Julie Cooper on 2016-03-03.
To ask the Secretary of State for Work and Pensions, what assessment his Department has made of the effect of increasing the state pension age on savings.
Justin Tomlinson
The projected increase in the number of people working as a result of the rise in State Pension age provided for by the Pensions Act 2011 was estimated to generate a significant increase in gross employment earnings. Under this new timetable the peak increase compared to the previous timetable would be £5.0 billion in 2022/23 (in 2011/12 prices).
At an individual level, working longer and saving into a private pension will, on average, increase lifetime pension income. Taking into consideration the additional employment income, individuals’ lifetime income will be improved if they work longer. Analysis by the Institute for Fiscal Studies has shown that the rise in women’s State Pension age from 60 to 62 has been accompanied by increases in employment rates for the women affected.
Research by the National Institute of Economic and Social Research in 2011 showed that an increase of one year in the average effective working life is estimated to result in additional annual national output worth up to one per cent of GDP. In the same research, it was estimated that real GDP would be six per cent lower than it otherwise would have been by 2030, if plans for raising the state pension age (according to the Pensions Act 2007) were not implemented.
The increase in labour supply as a result of the Pensions Act 2011 was also estimated to boost GDP above the projected baseline of the previous timetable. GDP could be between £7 billion and £9 billion higher in 2022/23 (in 2011/12 prices); in the period 2016 to 2026, the increase in labour supply due to the increase in State Pension age could boost national output by £70 billion (in 2011/12 prices).
More information on both impacts can be found in Annex A of the Pensions Act 2011 Impact Assessment at::
https://www.gov.uk/government/publications/pensions-act-2011-impact-assessment
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