LONDON — The UK should stop giving state pensions to the richest and “free up resources” to raise pension levels, according to the Organisation for Economic Co-operation and Development, a Paris-based group of rich countries.
UK pensions are not currently means-tested and every citizen is eligible to receive them once they reach retirement age — even those with enormous personal fortunes, provided they have made 30 years’ worth of National Insurance contributions.
Mark Pearson, deputy director of employment, labour and social affairs at the OECD, told the Financial Times that cutting payments to the richest 5 or 10% of retirees would allow the government to raise pensions for the remaining claimants.
British pension levels are low compared to other wealthy nations: the new annual state pension of £8,296, introduced last year, represents 16% of the average national salary, compared to the OECD average of 20.5%.
Pearson said that the UK was facing similar pressures to many developed countries, including an ageing society and an increasing number of pension claimants.
He told the FT: “Faced with these pressures, are you going to ask people of working age to pay more, or people to work longer before they can claim their pension?
“Or another way to ensure an adequate pension is to think about whether the pension should only be paid to those who really need it, to ease the tyranny of the maths. Giving less [pension] to the people at the top would free up resources to increase general benefits.”
Pensions have become a central issue in the UK general election campaign as voters prepare to go to the polls in June. Prime Minister Theresa May has so far refused to guarantee the pensions “triple-lock” introduced by her predecessor David Cameron, which ensures that pensions rise in line with inflation, average earnings, or 2.5%, whichever is higher.