Surfing the Tsunami: A Plan for State Pension Reform

For some years the affordability of the UK State Pension has been an issue. And for some years, the most visible answer to this issue has been to raise the State Pension Age.

However, increasing the State Pension Age has a much greater impact on the least well-off — and they are the ones who are most dependent on this benefit. Just as importantly, increasing the State Pension Age is unlikely to control the cost of State Pensions in the long run.

Perhaps instead of using the State Pension Age alone, it is worth visiting the concept of means-testing. This would not be unprecedented. In fact, when the Old Age Pension was introduced in 1909, it was brought in as a means-tested benefit.

Using means-testing, whether alone or in conjunction with increases to the State Pension Age, could help to control the cost of the UK State Pension. What’s more, it could do so equitably, ensuring that those who most need it are more likely to receive it.