The leaked Labour manifesto proposal to scrap the planned pension age rise will cost taxpayers around £300bn, says former pension minister Steve Webb.
Webb calculates the combined effect of the proposed rise from 66 to 67 due between 2026 and 2028 and the planned rise from 67 to 68 due between 2044 and 2046 would cost almost a third of a trillion pounds.
The draft manifesto, which is yet to be ratified by Labour’s NEC and shadow cabinet, was leaked to the press earlier today.
Webb says everyone who reaches pension age between 2028 and 2046 would receive the state pension at 66 instead of 67. This would impact roughly 650,000 people per year over an 18 year period, totalling 11.7 million people. Assuming each person misses out on a flat rate pension of £8,000 per year in today’s money, that adds up to £93.6 billion.
The second of these changes could affect everyone who reaches pension age after 2046. Considering just today’s over-18s, this would affect all those aged 18-37, working out at 650,000 people per year over a 20 year period, roughly 13 million people. Each person would gain two years’ worth of state pension or £16,000 each, equating to a total of £208 billion says Webb.
Webb says: “The cost of cancelling planned state pension age increases is astronomical. These are eye-watering sums of money which would either have to be found from somewhere or added to the national debt. As we live longer, it is inevitable that state pension ages will have to rise, as they are around the developed world. It is unrealistic to suppose that as a nation we can afford to ignore the fact that we are all living longer.”