Friday 31 March 2023

UK State pension age rise to 68 will not be brought forward yet

 By Kevin Peachey & Sam Francis

A rise in the state pension age to 68 will not be brought forward yet, the government has announced.

Those born on or after 5 April 1977 will be the first cohort to work to 68, under current plans. A 2017 government review suggested expanding this to include those born in the late 1960s.

The work and pensions secretary said the pension age would not be changed until a further review was carried.

A decision is now expected in 2026, after the next general election.

By law the government is required to examine planned changes to the system every six years.

A recent report found life expectancy for retiring Britons is now two years lower than when the government last reviewed the state pension age in 2017.

Labour said increases in life expectancy were being "dragged down" by a "rising tide of poverty".

A separate review by Baroness Neville-Rolfe looking at what factors the government should take into account when setting the pension age was published on Thursday.

And on Thursday, a further review was commissioned by Work and Pensions Secretary Mel Stride to look into raising the state pension age.

A further study was needed as the previous reviews were "not able to take into account significant external challenges including impact of the Covid pandemic and global inflation caused by Putin's illegal wat in Ukraine", Mr Stride said.

The new review will report within two years of the new parliament, he added.

Labour supported the government's position, but shadow work and pensions secretary John Ashworth said the government had last year said bringing forward an increase in state pension age "was absolutely necessary for the long term sustainability of the public finances".

"Now it turns out with general election only a year away the and the government trailing so badly in the polls, not raising the state pension age is not so reckless after all," he added.

The state pension is a monthly payment currently made to 12.5 million people who have reached qualifying age and have paid enough in national insurance contributions.

Next week, the amount paid will increase by 10.1% in line with the rising cost of living.

That means it will be worth:

  • £203.85 a week (up from £185.15) for the full, new flat-rate state pension (for those who reached state pension age after April 2016)
  • £156.20 a week (up from £141.85) for the full, old basic state pension (for those who reached state pension age before April 2016)

Work and Pensions Secretary Mel Stride will make a statement in the House of Commons later to confirm the conclusions of the latest statutory review on the pension age.

The Daily Express newspaper, where the story first appeared, said Mr Stride would announce a new review to be carried out after the next election.

The qualifying age to receive the pension has been a matter of intense speculation, with two reviews having been considering the appropriate age and how that should be calculated.

The main argument for accelerating a rise in the state pension age has always been that people are living for longer.

The state pension bill is estimated to grow by 35% to around £148bn by 2027-28 according to the Office for Budget Responsibility.

The Institute for Fiscal Studies, a leading economic research group, said that it was a "reasonable estimate" that increasing the state pension age by one year in the late 2030s would save the Government £8bn to £9bn a year in today's terms.

But experts point out that, although the cost of the state pension has been rising, life expectation has stalled recently.

There is also a wide difference in life expectancy across different parts of the country, with people generally likely to live longer in more affluent areas. That creates an added complication when setting a state pension age which is uniform across the UK.

At the moment, the age limit is based on ensuring no-one spends more than one third of their adult life in retirement.

State pension increases currently set out in legislation are:

  • A gradual rise to 67 for those born on or after April 5, 1960
  • A gradual rise to 68 between 2044 and 2046 for those born on or after April 5, 1977

Proposals to raise the state pension age are often controversial. Riots broke out on the streets of France after the French government decided to force through pension reforms without a vote in parliament.

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