New calls have been published for the state pension age to rise to 75 with a 40 per cent higher payout.
Those who don't have sufficient funds to live on once they reach 60 would be able to claim Universal Credit
The Senior Citizen’s Pension would provide certainty of income until death, but it would be "substantially larger" than today’s state pension (around 40 per cent), the report stated.
Michael Johnson, expert on pensions policy and taxation, and the author of 'Pensions: a vision for the future' explained that having a set amount live on from the age of 75 would encourage retirees to concentrate decumulation of their DC pension pots and other savings into a finite 15 year window between the age of 60 and 75.
DC pots would then go much further (i.e. produce higher incomes) because, with the removal of the life expectancy “tail risk”, annuity pricing over that period would improve, substantially.
Following the introduction of a Senior Citizen’s Pension, retirement income between the ages of 60 and 75 would be derived from one or a combination of
defined contribution (DC) personal and workplace pension pot decumulation
final salary / defined benefit (DB) pensions (diminishing over time)
drawings from ISAs and other savings; and
legacy State Pension rights (diminishing over time)
Those without significant savings would get additional state support from Universal Credit at the enhanced rate. Income Support would be extended beyond state pension age (currently 66) to form an integral part of the post-retirement benefits framework, and also enhanced to fill the 60-75 income gap.
If these changes took place, Johnson stated Pension Credit would then not be needed.