Sir Tony Blair has argued that the state pension should be scrapped, describing it as “outdated, inflexible, and increasingly unaffordable.”
In a recent report, the Tony Blair Institute (TBI) proposed replacing it with a new scheme called the Lifespan Fund. Under this system, some individuals would need to work up to five additional years to receive the same level of benefits.
The former prime minister’s think tank also recommended a series of wider reforms, including ending the triple lock, abolishing pension credit, and removing the fixed state retirement age—changes it claims could save around £66 billion annually by 2070.
The Telegraph reports: Official figures show the number of retirees will rise from 12.6 million today to nearly 19 million by 2070, increasing state pension spending to almost 8pc of GDP and making reform “unavoidable”, it argued.
Sir Keir Starmer has promised to retain the triple lock for the current parliament, arguing that retirees deserve “certainty” from politicians over their finances. In a poll conducted for The Telegraph across Britain, just 22pc of respondents were in favour of reforming the measure, and 65pc said older people deserved the protection it provided.
However, the TBI said the triple lock had become a “long-run cost escalator” and urged the Pensions Commission to broker a pre-election pact among the major parties, enabling whoever forms the next government to remove it from 2030.
Under the TBI’s Lifespan Fund, workers would receive half a year’s entitlement for every year of National Insurance contributions, up to a maximum of 20. This would require 40 years of contributions from the age of 16, but years spent seeking a job, caring, studying full time or in periods of ill health would count towards someone’s entitlement.
There would be no official retirement age. People could instead choose when to take their pension, which would remain guaranteed for life and be provided by the state.
The amount they receive would vary based on their contributions, age, health and life expectancy, similar to the way pension savers are offered an annuity.
However, the triple lock would be removed and pensions would only rise by the median level of earnings. Anyone who wanted to retire early would have to demonstrate they had access to a total retirement income of at least £12,500 in today’s figures before claiming.
Tom Smith, of the TBI, said it was the upgrade Britain needed.
He said: “Britain’s state pension system was built for a different era. We can’t keep pouring money into a system that is increasingly unaffordable. Pension spending must be contained, and that means the triple lock cannot continue after the next election.
“Real reform must also build a better system – one that is fairer, more flexible, and designed for how people live today.”
However, Sir Steve Webb, a former pensions minister, said: “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.
“We have just created a new state pension system which is relatively simple and standardised and which forms a firm basis for retirement planning.
“It would be a huge backward step to replace it with something fiendishly complex and highly intrusive, and which would take many decades to implement in full.”