The new Work and Pensions Secretary Mel Stride has confirmed that the outcome of the State Pension age review will be published before May 2023. The review will consider a wide range of evidence, including findings from two independent reports, to assess whether the rules about State Pension age remain ‘appropriate’.
Earlier this year, the Department for Work and Pensions (DWP) launched the second review of the State Pension age, which is now 66 for both men and women across the UK. Mr Stride told the Work and Pensions Committee on Wednesday that the review is considering issues of cost and intergenerational fairness, suggesting the impact on the public purse of an ageing population will get “pretty hairy”.
He confirmed to the cross-party panel of MPs that the review is expected before the deadline in May, but refused to be drawn on any decisions contained within the report.
Mr Stride was asked about the review by MPs on the cross-party panel, who pointed out that life expectancy is not rising. And while he did confirm that the review is expected to be published before May, he would not be drawn on any decisions contained within the report.
He told MPs: “I think there are various moving parts in assessing where we should go with the State Pension age.
“One of them is life expectancy and more precisely, what proportion of your life should we expect people to have in retirement as opposed to not in retirement?
“Another is the cost, and if you look at the consequences of us living longer, and you look at that, for example, as expressed in the financial stability report that the OBR produces every year, where it casts out 50 years and says ‘what are the public finances likely to look like given the demographic change that’s going on?’, the cost of pensions being an element within that, it all gets pretty hairy.
“So there is also certainly this other element of ‘what’s the cost going to be’?
“I think there are other issues - intergenerational fairness, when you look at the split between how long somebody works to support those that are not working.”
A previous review of the State Pension age in 2017, led by John Cridland, established that people should expect to spend on average up to one third of their adult life in retirement.
Asked if the UK Government is “seriously thinking” of reducing that proportion, Mr Stride said that review is “a factor to consider but I can’t really be drawn on what my thoughts are at this stage as to whether Cridland is about the right figure or not”.
“But clearly, that metric is a very important measure”, he added.
What is being considered in the State Pension age review?
This second review is considering whether the rules around pensionable age are appropriate, based on the latest life expectancy data and other evidence.
State Pension age is now 66 and two further increases are currently set out in legislation.
These 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
The first review of State Pension age was undertaken in 2017 and concluded that the next review should consider whether the increase to age 68 should be brought forward to 2037-39 before tabling any changes to legislation.
What will the State Pension age review consider?
The review will consider a wide range of evidence, including:
- Examining the implications of the latest life expectancy data
- Providing a balanced assessment of the costs of an ageing population and future State Pension expenditure
- Consider labour market changes and people’s ability and opportunities to work over State Pension age
- Developing options for setting the legislative timetable for State Pension age that are transparent and fair
The Pensions Act 2014 requires the UK Government to regularly review State Pension age, and in accordance with law, this latest review must be published by May 7, 2023.
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