United Kingdom state pension age increase to 68 brought forward

Posted July 20, 2017

Recent longevity data has suggested that improvements to United Kingdom life expectancy have plateaued.

The state pension age is to rise to 68 from 2037, which is seven years earlier than planned and will affect six people now in their mid-40s.

Plans to raise the state pension age (SPA) to 68 seven years ahead of schedule by 2039 has been welcomed by the industry as a necessary move to reflect rising life expectancy and keep costs affordable.

"Failing to act now in light of compelling evidence of demographic pressures would be irresponsible and place an unfair burden on younger generations", Mr Gauke's department said.

Under the current law, the state pension age is due to increase to 68 between 2044 and 2046.

This timetable would save the equivalent of around £400 per household as it would reduce the rise in pensions by 0.4% of GDP between 2039 and 2040.

'For people in midlife and younger their State Pension may seem a lifetime away but the fact is that the change announced today will have a real impact on them later in life'.

For decades, the state pension age was unchanged.

The government's decision to increase the United Kingdom state pension age to 68 sooner than previously expected is in line with recommendations of John Cridland's recent official Review.

Jon Greer, head of retirement policy, at Old Mutual Wealth, adds: 'The government deserves some credit for biting the bullet and taking the unpopular decision to increase the State Pension age.

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However, Labour and charities were quick to condemn the plans, with the shadow work and pensions secretary, Debbie Abrahams, describing them as "anything but fair", and arguing that many pensioners faced a "toxic cocktail" of ill-health long before they reached 68.

'We can not allow this Government to push people to work longer and longer to pay for its failed austerity agenda. This amounts to a saving of £74 billion by 2045/46 compared with the previous proposals.

'It's ironic that the government is proceeding with an accelerated increase in the state pension age days after statistics show improvements in life expectancy may be levelling off, meaning this increase may be less justified on affordability grounds'.

Gauke said the government was "aiming at the proportion of life spent in receipt of state pension to be 32%".

When the modern State Pension was introduced in 1948, a 65-year-old could expect to spend 13.5 years in receipt of it - 23% of their adult life.

The median life expectancy for a male in the United Kingdom is 86, and 89 for a female.

"And low-paid workers at risk of insecurity in their working lives will now face greater insecurity in old age too".

Gauke said that under Labour's proposed timetable, state pension spending would be £20bn a year higher.

Other issues concerning the state pension remain unresolved, however, and establishing a sustainable system for increasing the payment must be addressed sooner or later.

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