UK will have to raise retirement age after election, minister says

UK will have to raise retirement age after election, minister says

12 May    Finance News, News

Ministers will have to “grasp the nettle” on bringing forward the rise in the state pension age to 68 in the first couple of years of the next parliament, Mel Stride, the work and pensions secretary, has suggested.

After delaying the decision because of stalling life expectancy, Stride said it would still have to be taken, but it would probably be one for his successor in the job and that people would still get 10 years of notice.

He also said there were “no plans currently” to change the triple lock on raising pensions in the next Conservative manifesto but stopped short of guaranteeing it would be retained.

Stride made the remarks as he addressed journalists at a lunch in Westminster, when he was asked whether the government will attempt to revisit its plans to raise the pension age in future in light of riots and protests in France.

The work and pensions secretary, a close ally of Rishi Sunak, said: “I don’t think it’s in our national psyche to start rioting and burning things over the state pension. Ultimately I took the decision [to delay] because of Covid and economic uncertainties and the fact that the important thing is you give people 10 years notice of any change.”

The range of dates for the moving up of the state pension age from 67 to 68 is well into the 2030s: you’re debating 2030s, 40s or thereabouts. There’s no reason why we need to take the decision now; you can wait until the first couple of years of the next parliament, take that decision and still give people 10 years notice.”

However, he said the decision still did need to be taken.

“There is a real tension because if you look at the OBR’s fiscal sustainability reports projecting 50 years … the demographic changes and the costs of pensions is really weighing in the wrong direction. So there is a point in time at which the nettle will have to be grasped, but it doesn’t need to be grasped until somebody other than me is in the [job],” Stride said, suggesting he does not see himself being work and pensions secretary after the next election.

Asked about the triple lock on pensions, which guarantees that payments rise by the higher of inflation, earnings or 2.5%, Stride said there were “not any plans currently” to abandon it in the next Conservative election manifesto. “I think the triple lock is a decision for the PM and others, and there are no plans to change the triple lock,” he said.

This year pensioners will see record growth of 10% at a time when wage growth is only at about 5.5% amid high inflation.

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.

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