The Scottish National Party (SNP) has indicated that the party favours a lower state pension age in Scotland, on the basis that the UK-wide plan to increase the age at which people are eligible to claim their pension disadvantages Scots, who have a lower life expectancy
Nicola Sturgeon, the Scottish first minister, said the SNP would use its power in the next parliament to oppose any attempt to push up the state pension age, which is set to increase to 66 between November 2018 and October 2020, and 67 between 2026 and 2028, and which will be linked to life expectancy thereafter.
Sturgeon also suggested that a future Westminster government might even have to exempt Scotland from the changes, on the basis Scots have the lowest life expectancies at birth in the UK. Figures from the Office of National Statistics show Scottish 65-year-old males and females can expect to live shorter lives of 1.2 years and 1.3 years respectively than in the UK as a whole.
Scottish government research suggests an 65 year old woman entitled to a total pension of £160 per week could expect to get around £11,000 less in Scotland than counterparts in the rest of the UK as a whole, and £10,000 less for a man. This pension gap increases to £22,000 for a woman who lives in Glasgow, and to £29,000 for a man living in Glasgow, where life expectancy rates are lowest.
Financial advisers Hargreaves Lansdown estimate that creating an exemption for the Scots and pegging their state pension age at a lower level could cost the UK as a whole around £1bn, based on previous research by the National Institute of Economic Research (NIESR) and the Pensions Policy Institute.
Tom McPhail, head of pensions research, Hargreaves Lansdown, said: ‘We’re just in the process of equalising pension ages for men and women. Changing tack to create a new category just for the Scots is not something which should be undertaken without considering how it would fit into wider pensions policy.’
McPhail also pointed out that some annuity providers use postcode to price annuities, with analysis showing that residents in some Scottish postcode districts are assessed as having life expectancy rates on a par with those found in some of the highest life expectancy regions in the UK, such as parts of Dorset.
‘It would be lovely if politicians would stop making up pensions policy on the hoof for the sake of short term popularity. These kind of issues would benefit from independent analysis, which is why we support the idea of a Pensions Commission to advise government policy,’ McPhail said.
SNP policy on pensions includes a commitment to the retention of the triple lock to ensure the state pension rises in line with inflation, or with wages by 2.5%, whichever is higher. The party also wants to keep a single tier pension rate of at least £160 to ensure pensioners are not subjected to the ‘scourge’ of means tested benefits.