In an interview published by the FT, Gauke insists the Government will not shirk the “big decisions” on pensions and that “we need a state pension that is both fair and sustainable”.
The state pension age is due to rise to 67 by 2028 and 68 by 2046, but two reviews – one by John Cridland and the other by the Government Actuaries Department (GAD) – pointed to an accelerated timetable to prevent costs spiralling out of control.
Tom Selby, senior analyst at AJ Bell, comments:
“The Government has already shirked one big state pension decision by pledging to retain the triple-lock as part of the deal with the DUP. However, with the cost of the existing system expected to spiral as society continues to get older, it appears the new Secretary is paving the way for a potentially hugely unpopular acceleration in the timetable for state pension age increases.
“This will likely set the minority Government on a collision course with Labour, which has already rejected the recommendations of the independent Cridland review. This could prove a serious test of resolve for Theresa May’s weakened administration.”
Gauke also suggested previous administrations had been guilty of “tinkering” rather than pursuing a long-term savings agenda.
Selby says: “No department has been guiltier of tinkering at the edges of pensions than the Treasury, where Gauke was a minister for seven years. Hopefully his more measured tone today suggests a shift away from chopping and changing tax reliefs - an approach which risks corroding trust in the system.
“However, we have already seen reports that savings incentives could again be targeted, this time to pay for public sector pay increases. We need policymakers to adopt a longer term approach to pensions tax, starting by establishing an independent commission to review the system and suggest any necessary changes. This commission should have a central aim of simplifying the system and encouraging more people to save for retirement.”