The government has confirmed that a rise in the state pension age to 68 will not be brought forward at this stage.
Current rules mean those born on or after 5th April 1977 will work until 68. While a government review in 2017 suggested this could be moved to those born as early as the late 1960s, the work and pensions secretary Mel Stride has confirmed any changes will not occur until further reviews take place.
Stride suggested further studies would be required given previous reviews “[did not] take into account significant external challenges including impact of the Covid pandemic and global inflation caused by Putin’s illegal wat in Ukraine”.
The government is required by law to assess the system every six years, though a decision is likely to come in the new parliament in 2026.
“It is understandable why the Government has delayed this decision. However, with the cost of state pensions increasing and the current position of UK finances, we need a proper debate on the future of the state pension,” said Andrew Tully, technical director at Canada Life, adding:
“Increases to life expectancy have not only slowed but projected to go into reverse since the last review. We also have a very unequal position with people in the poorest areas yet to see or feel the impact of the levelling up agenda, which will take decades and generations in terms of public health inequality. That supports a delay to the increase to state pension age as it will hit those in the poorest communities the hardest.”
Tully added that, given the expense of the current system, “there has to be a sensible debate around intergenerational fairness and the affordability of the state pension in its current format”, suggesting that by 2045 the number of people of pensionable age will grow to 15.2 million, an increase of 28% on the level in 2020:
“Any changes to state pensions are always going to be controversial but it is a debate which needs to take place, sooner rather than later, and ideally any changes need to have cross-party support.
Another key point is the minimum pension access age is linked to the state pension age. This is due to increase from the current age 55 to age 57 from 2028 and then it will increase again as and when SPA increases further, a point people need to consider as part of their retirement planning.”
Jon Greer, head of retirement policy at Quilter, added:
“The delay to increasing the age […] does put the state pension’s long term sustainability into the spotlight and this could be the government simply kicking an inevitability down the road for the next party to take government to deal with. Overall the Government aspire to aim for ‘up to 32%’ in the long run as the right proportion of adult life to spend in receipt of the State Pension. As a compromise if they choose not to raise the age then it does not leave the Government with many levers it can pull…
…It may leave the Government with the choice of reviewing the triple lock and replacing it with a less generous uprating mechanism and/or accepting that funding for state pensions is going to increase through higher taxes (or national insurance). But it’s a question of what the general public would dislike least because we face difficult decisions.”