Relief for 43-54 year olds as decision to raise retirement age to 68 set to be postponed until after next general election
- There were rumors that the government was considering accelerating the age increase until 2035
- Life expectancy forecasts are less optimistic and a decision would lead to a backlash
- Critics have warned that the sick and poor and carers will be the most affected
The legal retirement age for men and women is now 66, and between 2026 and 2028 it will increase to 67.
The government is about to postpone its decision on raising the legal retirement age to 68 until the next election.
Rumors that he is planning to speed up the age increase until 2035 – affecting people aged around 43 to 54 now – have sparked warnings that the sick and poor and carers will bear it the weight.
The move would be ‘incredibly unpopular’ and likely ‘political suicide’, say pensions commentators who also pointed to widespread protests in France in response to a planned increase in the retirement age to 64.
The government is expected to cite lower average life expectancy forecasts as the reason for postponing any decision – but the move is also likely to reignite debate over whether the ‘triple lock’ on annual increases to government pensions is affordable.
The state pension will rise by 10.1% in April, with the full flat rate reaching £203.85. The old state pension, which is topped up with S2P and Serps rights if you have earned them, will increase to £156.20.
The legal retirement age for men and women is now 66 and between 2026 and 2028 it will rise to 67.
Officially, the next increase to 68 is expected to take place between 2044 and 2046, but a previous government review recommended the change be brought forward to 2037-2039.
And recent reports suggested it was planning to raise the age by 2035, affecting people born between 1968 and 1979.
“Given that we have literally seen riots in the streets in France in response to a proposal to raise the state pension age, it is not surprising that the British government has backed down from the idea of accelerating a planned increase in the UK state pension age. 68,” says Tom Selby, head of retirement policy at AJ Bell.
“With less than two years to go from the general election, raising the retirement age faster would likely have been political suicide for the Tories, who are already trailing Labor in the polls.
“The ruling will be a huge relief for people in their late 40s and early 50s who may have been forced to wait a further 12 months to receive their state pension as a result.
Given that we have literally seen riots in the streets in France in response to a proposed increase in the retirement age, it is no surprise that the British government has backed down
“Raising the statutory retirement age more rapidly would also arguably have been unfair, as average life expectancy has actually fallen recently, while forecasts of future improvements in life expectancy have also been significantly revised. on the decline.”
Jon Greer, head of pension policy at wealth manager Quilter, said: ‘The Conservatives seem understandably determined to try to reclaim some public favor among its core constituents by delaying the widely expected rise in the retirement age. state retirement.
“Any increase would have proven incredibly unpopular and we may see more of these crowd-pleasing policies as we head into the general election.
“The deferral plan would have been due to a lower average life expectancy. However, it is expected that the number of people over the statutory retirement age will increase significantly over the next 20 years, while the proportion of the working-age population supporting them will start to decline.
“The Institute for Fiscal Studies suggests that a one-year increase in the state pension age in the late 2030s would likely save around £8-9 billion a year in terms of current. However, delaying the planned increase in the retirement age to 68 by seven years would cost at least £50billion.
“This may leave the government with the choice of revisiting the triple lock and replacing it with a less generous revaluation mechanism and/or accepting increased funding for state pensions through higher taxes (or national insurance).”
Under the triple lockdown, the state pension increases each year according to the higher income growth, the rate of inflation or 2.5%.
Regarding life expectancy, the tables below from AJ Bell compare the official projections in 2014 with those in 2020.
In 2014, the Office for National Statistics predicted that in 2028 the average life expectancy for a 67-year-old man would be 21.1 years and that of a woman 23.1 years.
The latest estimates for 2028 bring it down to 18.7 years for a man and 20.8 years for a woman.
The pandemic has skewed the numbers, and the government can argue it needs more time to see how this has impacted life expectancy going forward.
Source: AJ Bell analysis of ONS data
