Decision on bringing forward UK pension age rise to 68 delayed until after election

Decision on bringing forward UK pension age rise to 68 delayed until after election

31 Mar    Finance News, News

A decision on whether to bring forward the date when the state pension age rises to 68 has been postponed until after the next general election, the government has announced.

Responding to a review of the UK retirement system’s funding, the work and pensions secretary, Mel Stride, told MPs on Thursday that now was not the time to make the change.

Under current plans, the state pension age of 66 is due to rise to 67 in a phased introduction between 2026 and 2028, and then to 68 between 2044 and 2046 – affecting people born after April 1977.

A 2017 government review suggested bringing the latter range forward to the late 2030s, forcing millions of people born in the early 1970s who expected to retire at 67 to wait another year.

Reports in January claimed ministers planned to bring forward this increase to 2035 – affecting people who are 54 and under today – in response to lobbying by the Treasury hoping to save billions of pounds in state pension payments.

However, with a general election expected in the autumn next year, ministers had feared a potential backlash to the change from middle-aged voters. Riots in France over a planned increase in the country’s pension age from 62 to 64 have also spooked UK officials in favour of the changes.

Stride told MPs that falling life expectancy rates had brought down the probable annual cost of the state pension over the next 30 years, and therefore his department would carry out a further assessment to consider the rise within two years of the start of the next parliament.

He said: “Given the level of uncertainty about the data on life expectancy, labour markets and the public finances, and the significance of these decisions on the lives of millions of people, I am mindful a different decision might be appropriate once these factors are clearer.”

A full state pension pays recipients £9,627.80 a year. It is to rise by 10.1% in April after the government confirmed that a triple lock – which ties the increase to earnings, inflation or a minimum 2.5% – would apply, leading to an increase in line with last September’s figure for rising prices.

By law, the government is required every six years to examine the impact of changes in life expectancy and national insurance (NI) payments on the pension system.

Lady Neville-Rolfe, a Conservative peer, led the review assessing how to maintain the government’s aim of ensuring nobody spends more than a third of their adult life in retirement. It was completed last September but the government has yet to publish it. A separate review by the government’s actuary is examining the latest life expectancy data.

While NI payments have risen in recent years, especially by employers, life expectancy is no longer expected to rise as quickly as previously projected.

The charity Independent Age said its research showed previous changes to the pension age had resulted in increased poverty among those groups affected. “Bringing forward the rise to 68 would have meant more people struggling financially in their mid-60s and beyond,” it said.

Ros Altmann, an independent peer and pensions expert, said it would be wrong to go ahead when increases in life expectancy had slowed or possibly reversed “and huge differentials in healthy life expectancy remain”.

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