Think tank the Tony Blair Institute has proposed replacing the state pension with a ‘Lifespan Fund’ that can be withdrawn from before retirement.
The TBI also proposed replacing the triple lock with a “smoothed earnings link”, to prevent spiralling costs.
In addition, retirement age would be linked to individual health rather than a one-size-fits-all state-pension age, which the TBI claims penalises those with shorter life expectancies who are often on lower incomes.
This assessment of life expectancy would be collected through analysis of an individual’s NHS data.
Steve Webb, former pensions secretary and now a partner at consultancy Lane Clark & Peacock, says: “The idea of linking state pension payments to individual health records and individual life expectancy is deeply troubling. Leaving aside issues of confidentiality and data quality, it is very hard to make a precise leap from health records to life expectancy.
“The report says that they would not want to pay higher pensions to those who had poorer health because of lifestyle choices such as smoking, but it is very hard to see how they would exclude the impact of smoking on someone’s overall health.”
The TBI proposal also includes an appeals stage to an individual state pension age, which Webb described as a potential “administrative nightmare”.
Furthermore, UK citizens would manage their account through the Lifespan App – a digital platform giving individuals visibility over their entitlement. The app would show their balance, projected pension value and eligibility for early withdrawals, and display a personalised estimate of how much annual income their Lifespan Fund would purchase at different ages.
Mark Futcher, head of DC Pensions at Barnett Waddingham, part of Howden, says: “Any debate about the future affordability of the state pension is welcome and necessary, particularly given current fiscal and demographic pressures. However, the most important question is not just how the state pension is uprated, but whether working people are being supported to build sufficient retirement income alongside it.”
Founded by the former UK prime minister, the Tony Blair Institute was founded in 2016, and wider work includes with the government of Saudi Arabia, and with the Trump administration in forming policy positions in Gaza.