Govt defers accelerating state pension age to 68

The government has confirmed that it will not increase the state pension age from 67 to 68 any sooner than currently planned.

Last week, FTAdviser's sister publication, The Financial Times revealed that ministers had delayed plans to raise the state pension age to 68 amid falling life expectancy in the UK.

The state pension age, currently 66, is due to increase to 68 after 2044 however reports earlier this year suggested the government wanted to bring this forward to between 2037 and 2039.

However, in its state pension age review published today (March 30), the government confirmed that no change will be made to the legislated timetable, meaning that pension age is currently still set to rise to 67 by 2028 and 68 by 2046. 

Becky O’Connor, director of public affairs at PensionBee, said: “Announcing a more imminent increase to the state pension age could have risked a strong backlash. 

“The Secretary of State for Work and Pensions said that the current planned rise from 67 to 68 by 2046 ‘remains appropriate’, however the government left the door open for a further review. 

“Given the cost of living crisis and slowing of life expectancy; at a time when more older workers are giving up work early because of poor health and when it feels harder than ever to save for oneself for retirement, moving the state pension goalposts now would be a difficult sell.”

O’Connor added: “In reality, it will still be a hot potato for the next government in a few years’ time.”

Likewise, Nigel Peaple, director of policy & advocacy at the Pensions and Lifetime Savings Association, said it is a “very positive step for future pensioners” as most people will rely heavily on the state pension to make up the majority of their retirement income. 

In its review, the government said it plans to have a further review within two years of the next parliament to consider the rise to age 68.

The government was also recommended by Baroness Neville-Rolfe, who carried out a report on wider factors relevant to setting state pension age, to explore the possibility of an early access scheme whereby workers who meet certain qualifying criteria can access their state pension early at a reduced rate.

10-year notice

The government said it was committed to give 10 years notice of any changes to the state pension age and enabling people to plan for retirement with certainty. 

Keeping to the ‘10-year notice’ rule means that a review in 2026 could in principle still recommend changes as soon as 2036.