The State Pension age could be rising too quickly as life expectancy rates grind to a halt.

Analysis from pensions consultancy LCP suggests that life expectancy has stopped increasing. The rise in State Pension age, first from 65 to 67 and later to 68, may not be needed as a result.

The increase in State Pension age, cost aside, was predicated on rising life expectancies in the UK. But LCP’s analysis suggests life expectancy is now in fact decreasing, making the rise in age for State Pension unnecessary.

The Government had decided to increase the State Pension age on the basis that no one should spend more than a third of their life earning a retirement income from the State. It decided the State Pension age should rise to 68 by 2039.

The Government based its review of the State Pension age on average UK life expectancy. For example, as part of its analysis the Government predicted a woman aged 66 in 2014 could expect to live to age 89. But estimates from LCP suggest that women can now only expect to live to 87.

As a result, the increase in the State Pension age from 66 to 67, which is currently scheduled between 2026 and 2028 could be pushed back by 23 years – to 2049-51. Those born between 1961 and 1984 would enjoy much earlier receipt of their State Pension.

But the sheer cost of reversing the age rise could be too much for the Government to bear. Before the secondary impacts of taxation, reversing the State Pension age increases could cost the Treasury some £195 billion, with more than 20 million people potentially affected by the changes.

Commenting, Steve Webb, partner at LCP said: “The Government’s plans for rapid increases in state pension age have been blown out of the water by this new analysis.

“Even before the pandemic hit, the improvements in life expectancy which we had seen over the last century had almost ground to a halt.

“But the schedule for state pension age increases has not caught up with this new world. This analysis shows that current plans to increase the state pension age to 67 by 2028 need to be revisited as a matter of urgency.

“Pension ages for men and women reached 66 only last year, and there is now no case for yet another increase so soon.”

If you’d like to know more about what a change to the State Pension age could mean for you, then get in touch with your financial adviser.