The Investing and Saving Alliance (Tisa) has warned that the rise in the state pension age and a reduction in tax incentives for private pensions could leave millions of “future retirees financially exposed.”
Tisa is urging policymakers to take a holistic view of retirement income policy and said that while life expectancy is an important factor, it should not be the sole driver of decisions on pension reform.
In its response to the Third State Pension Age Review, Tisa sets out several recommendations, including a minimum 12-year lead time for any changes to the SPA to allow individuals to plan effectively. It also called for early access flexibility for those with reduced life expectancy, with safeguards to ensure this does not become the default or disadvantage those already in poverty.
It also recommended strengthening auto-enrolment to ensure that the combination of the state pension and private savings can deliver adequate retirement income. It said intergenerational fairness should be considered, given the impact on current workers who may need to support a growing number of retirees while waiting longer to access their own state pension benefits.
Tisa also called for a more nuanced approach to linking SPA to life expectancy, warning that current projections are outdated. It said any automatic adjustment mechanisms should be carefully designed to account for unexpected events and avoid unintended consequences.
Tisa head of retirement Renny Biggins says: “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.”
He adds: “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.”