A planned rise in the State Pension age to 68 will not be decided until a new review is conducted two years after the next General Election. Work and Pensions Secretary Mel Stride told the Commons on Thursday that he agreed the planned increase in the State Pension age from 66 to 67 should go ahead between 2026 and 2028, a move that has been in legislation since 2014.
MPs heard an independent report has recommended the rise from 67 to 68 should take place between 2041 and 2043, four years later than previously accepted by the UK Government but still earlier than set out in legislation. Mr Stride said the current rules for the increase to 68 “remain appropriate”.
But the minister also noted he is “mindful a different decision” might be needed once a further review is conducted within two years of the next Parliament. This review would assess various factors including life expectancy and public finances. The next election is expected to take place in 2024.
He also emphasised that any change to the State Pension age would be communicated 10 years in advance. This could potentially see a rise to 68 occur as early as 2036 - if the review in 2026 finds good reason to do so.
Mr Stride told MPs: “As a society we should celebrate improvements in life expectancy, which has risen rapidly over the past century and is projected to continue to increase. Since the first State Pension age review was undertaken in 2017, however, the increase in life expectancy has slowed.”
He added: “Given the level of uncertainty about the data on life expectancy, labour markets and the public finances, and the significance of these decisions on the lives of millions of people, I am mindful a different decision might be appropriate once these factors are clearer.
“I therefore plan for a further review to be undertaken within two years of the next Parliament to consider the rise to age 68 again. This will ensure that the Government is able to consider the latest information, including life expectancy and population projections, that reflect the findings of the 2021 Census data, the latest demographic trends, and the current economic situation.
“We will also be able to consider the impact on the labour market of the measures we have announced to increase workforce participation and any other relevant factors. The current rules for the rise from 67 to 68 therefore remain appropriate and the Government does not intend to change the existing legislation prior to the conclusion of the next review.”
Mr Stride said Conservative peer Baroness Neville-Rolfe, who conducted one of the reviews, was unable to take into account the long-term impact of “challenges” including the Covid-19 pandemic and inflation linked to Russia’s renewed invasion of Ukraine.
Labour’s shadow work and pensions secretary Jonathan Ashworth said stalling life expectancy rates are a “damning indictment” of the UK Government. He said: “Today’s announcement that they are not going ahead with accelerating the State Pension age is welcome, and it is the right one.
“But it is the clearest admission yet that a rising tide of poverty is dragging life expectancy down for so many, and stalling life expectancy, going backwards in some of the poorest communities, is a damning indictment of 13 years of failure which the minister should have acknowledged and apologised for today.”
Mr Ashworth claimed that previous work and pensions secretaries had said it was “explicit Government policy to bring forward the increase in the state pension age to 68 between 2037 and 2039”.
He asked the minister: “Can he confirm whether the review that he has announced for the future will still consider bringing forward an increase in the state retirement age to 2037? Does that remain the Government’s policy ambition or is that now abandoned?”
Mr Stride, responded: “Given that we have made a commitment to a 10-year notice period, that would suggest that if the next review and I say if, it is for others to decide this in the course of time, we are say in 2026, that would indeed bring those dates as possible, but of course it wouldn’t preclude decisions being taken for dates further out than 2037-39.”
Alan Brown MP told Parliament that the SNP “opposes further increases to the State Pension age”. He said: “There is evidence that increasing the State Pension age from 65 to 66 caused absolute poverty rates to rise.
“Has the Secretary of State seen the Institute for Fiscal Studies report on that and, if so, has it been part of the decision-making process? What lessons has he learned from the Women Against State Pension Inequality Campaign (WASPI) about raising the state pension age for women born in the ’50s? When will they see some compensation?”
Responding to the comments about the WASPI women, Mr Stride said: “He will know that I am not able to comment on that matter as it is subject to a current inquiry by the parliamentary ombudsman.”
But, not all MPs in the chamber welcomed the delay. Jacob Rees-Mogg suggested an increase of the State Pension age to 72. He said: “Unlike the Labour party, I do not welcome this decision. From the 1940s to today, life expectancy from retirement has increased by seven years, which would indicate a retirement age of 72 rather than of 67 or 68.
“The benefit of long-term decision making is that it gives everybody the chance to plan well in advance. Delaying the decision is a decision in itself, and it is not exactly a sign of strength.”
A sentiment he reiterated later in the day during his ‘State of the Nation’ programme on GB News, calling the decision by the UK Government “feeble”. He told viewers: “Today the Government made the rather feeble decision to delay the retirement age increase. The great people of the United Kingdom, unlike the French, who strike at the thought of a six-hour working day, are a hard-working bunch and with an ageing population we have no choice but to retire later.”
Pension experts and former ministers were also quick to react to the delay. Former pensions minister Sir Steve Webb, who is now a partner at consultants LCP (Lane Clark & Peacock) raised concerns about the potential for the State Pension age to rise in the future.
He said: “It is welcome that the Government has taken account of the big slowdown in life expectancies in recent years and has held off any further increases in state pension ages for now. But there is a sting in the tail in the analysis which the Government has published today.
“If it adopts the idea of placing a cap on the share of national income spent on pensions, this would mean a rapid increase in pension ages, including a rise to 69 before the end of the 2040s. This would be a draconian shift in policy which would be likely to mean today’s younger workers facing a pension age of 70 or above.”
Former pensions minister Baroness Ros Altmann said: "The Government is right to recommend a wait-and-see approach, with further studies to understand better the full impact of both Covid - and the consequential backlogs in the healthcare system - on previous forecasts for life expectancy."
She continued: "With doubts having been raised about the trajectory of life expectancy forecasts, as well as the evidence of huge differentials across the country in healthy life expectancy, I do not believe it is safe to accelerate the rise in state pension age unless it also introduces more flexibility to the starting age."
Lady Altmann added: "Cutting costs would be the only reason to press ahead with accelerating the state pension age timetable and I am pleased to see this factor has not overridden social concerns."
The Institute for Fiscal Studies (IFS) has suggested that the cost to the Exchequer of not introducing a rise in the state pension age from 67 to 68 from the late 2030s could be around £8 billion to £9 billion per year. You can find out when you will be able to retire using the online tool at GOV.UK.
How to use the Pension Age tool
- Choose whether you are looking to calculate your State Pension age or bus pass age - you can do one, then check the other
- Once the State Pension age option is selected, input your date of birth
- Next, select whether you're a man or woman
- The final screen reveals the exact date that you will reach State Pension age
It’s also possible from this screen to get information on when you could become eligible for Pension Credit, get a pension forecast or receive other State Pension information.
Check your State Pension age on the GOV.UK website here.
To keep up to date with the latest State Pension news, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.
READ NEXT
Older people could still qualify for £301 cost of living payment with new claim for Pension Credit
New State Pension could be worth up to £862 each month next year under Triple Lock
Older people living in 25 countries may be due winter heating bill help of up to £600
Couples who want comfortable retirement lifestyle will need an annual income of more than £54,000
State Pension payments of over £2,000 each month for older people living in five European countries
