The Investing and Saving Alliance (TISA) has today warned that raising the State Pension Age (SPA) while weakening tax incentives for private pensions risks leaving millions of future retirees financially exposed in later life.
In its response to the Third SPA Review, TISA urges policymakers to take a holistic view of retirement income policy, stressing that while life expectancy is a key consideration, it must not be the sole driver of policy. TISA recommends including a minimum 12-year lead time for any changes made to the SPA, early access options which would benefit groups with reduced life expectancy, and stronger Auto Enrolment measures to bolster pension adequacy.
Renny Biggins, Head of Retirement at TISA, said:
“Raising the State Pension Age while simultaneously scaling back tax incentives for private pension saving risks creating a double whammy for future retirees. Without sufficient time and support to plan, many individuals — particularly those in lower-income households or with shorter life expectancies — could find themselves financially exposed, unable to bridge the growing gap between retirement and access to the State Pension. This approach risks undermining the adequacy and fairness of retirement outcomes across generations.”
TISA’s response highlights several key recommendations to ensure fairness and sustainability in any future changes to SPA:
- A minimum 12-year lead time for any SPA increase, aligning with the gap between the Normal Minimum Pension Age (NMPA) and SPA, to allow individuals and households to plan effectively.
- Early access flexibility which could benefit those with reduced life expectancy, with safeguards to ensure this does not become the default or disadvantage in the longer-term those already in poverty.
- Strengthening Auto Enrolment (AE) to ensure the combination of State Pension and AE can deliver the overall retirement income targets that are deemed appropriate for pensions adequacy
- Consideration of intergenerational fairness, including the impact on current workers who will be required to support a growing number of retirees living longer whilst potentially needing to wait longer to access state pension benefits themselves.
TISA also calls for a more nuanced approach to linking SPA to life expectancy, warning that current projections are outdated and that any automatic adjustment mechanisms must be carefully designed to account for unprecedented events and avoid unintended consequences.
Renny Biggins added:
“The State Pension is a cornerstone of retirement income for millions, and we welcome the Government’s intention to ensure its long-term sustainability. But any changes must be part of a joined-up strategy that considers private pensions, health inequalities, and the broader economic landscape. TISA stands ready to work with Government and industry to ensure that future reforms are fair, sustainable, and support better retirement outcomes for all.”
