Faster State pension age rise paused: what it means for you
The Government has abandoned plans to bring forward the increase in the State Pension age, at least for the time being.
Claims surfaced in January that the Government was seeking to bring forward the State Pension age increase to 2035, leaving people aged 54 and under with an extra year to wait before receiving the valuable benefits. This was largely down to money-saving pressures from the Treasury as it looked to steady the Government’s long-term finances. However, now this would appear to no longer be necessary.
The Government has kicked a final decision on this into the long grass and it is not expected to happen until after the next General Election in 2024, as it is seen as a vote-losing decision if taken. Work and pensions secretary Mel Stride confirmed the pause to MPs, commenting: “Given the level of uncertainty about the data on life expectancy, labour markets, 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.”
Current plans
Under current plans, the current State Pension age of 66 is set to rise to 67 between 2026 and 2028. It will then rise to 68 between 2044 and 2046. The latter change will affect anyone born after April 1977. A report published last year by Conservative peer Lady Neville-Rolfe aimed to ensure no one spent more than a third of their lives in retirement. The report recommended bringing forward the State Pension age increase to 68 by several years to 2041.
However, the Government is still reviewing actuarial data around life expectancy. A review by the Government into its retirement system funding found that life expectancy was not increasing as fast as expected, leaving the State Pension funding in a better position. Major events such as the pandemic and various crises in the health and care system appear to have clouded the picture on life expectancy for Brits somewhat. If indeed life expectancy isn’t increasing, or is even reversing, then the age changes may no longer be necessary at all.
The State Pension was created after the Second World War when life expectancy for average working adults was much lower than currently. This is why, in recent decades, the Government has been forced to undergo drastic changes to the rules and age boundaries, including equalising the retirement age for both men and women.
The State Pension has undergone a 10.1% uplift this year which means those in receipt of the new full State Pension will receive £10,600 a year. While this is a small amount of money, it still forms an essential, consistent part of retiree incomes, especially in later life.