The government will today confirm it will not accelerate a planned rise in the state pension age to 68, according to reports.
The state pension age is currently 66 and due to rise to 67 by 2028 and 68 by 2046. Based on the current timetable, broadly those aged 45 and below will have a state pension age of 68.
Ministers were rumoured to be considering an accelerated rise to 68 that could have forced people in their late 40s and early 50s to wait up to an extra year for their state pension.
Tom Selby, head of retirement policy at AJ Bell, comments: “Given we have literally seen rioting on the streets in France in response to a proposed rise in the state pension age, it comes as no surprise that the UK government has backed away from the idea of accelerating a planned rise in the UK state pension age to 68.
“With less than two years to go until the general election, hiking the state pension age faster would likely have been political suicide for the Conservatives, who are already trailing Labour in the polls.
“The decision will come as a huge relief to people in their late 40s and early 50s who could potentially have been forced to wait an extra 12 months to receive their state pension as a result.
“Increasing the state pension age faster now would also arguably have been unfair, as average life expectancy has actually fallen recently, while forecasts of future life expectancy improvements have also been significantly scaled back. Given improving life expectancy is one of the primary justifications for raising the state pension age, accelerating the planned rise to age 68 when life expectancy has dipped would be an extremely tough sell, to put it mildly.
“However, this might not be the end of the story, with the government expected to say it will push any decision beyond the election. If life expectancy growth returns by then, the next administration will likely be left grappling with this thorny issue once again.”
Background
When was the state pension first introduced?
The modern UK state pension was introduced in the wake of the Second World War. The Beveridge Report, first published in 1942, was the catalyst, proposing introducing a system of universal state pension coverage based on a social insurance model.
The 1946 National Insurance Act followed the end of the War and created the basic state pension in the UK in 1948. The reforms, based on a ‘pay as you go’ model funded in part by National Insurance contributions, remain the foundation of the state pension framework we see today.
The state pension age at which the basic state pension was first introduced at 60 for women and 65 for men – and remained unchanged for over 60 years until 2010.
What is the state pension worth today and when will I get it?
The full ‘new’ state pension is worth £203.85 per week in 2023/24, or £10,600.20 per year. The ‘old’ state pension, paid to those who reached state pension age before 6 April 2016, is worth £156.20 per week, or £8,122.40 per year.
Both the new and old state pension are protected by the ‘triple-lock’, meaning the benefits rise in line with the highest of average earnings, inflation or 2.5%.
In order to be entitled to the full new state pension, you need a National Insurance (NI) contribution record of at least 35 years. You need an NI contribution record of at least 10 years to be entitled to any state pension.
The age at which you become entitled to your state pension depends on when you were born. The current state pension age is 66 for men and women and is due to rise to 67 between 2026 and 2028, then again to 68 between 2044 and 2046.
Based on that timetable:
- Anyone born on or before 5 April 1960 will have a state pension age of 66
- Anyone born from 6 April 1960 to 5 April 1961 will have a state pension age between 66 and 67
- Anyone born from 6 April 1961 to 5 April 1977 will have a state pension age of 67
- Anyone born from 6 April 1977 to 5 April 1978 will have a state pension age between 67 and 68
- Anyone born from 6 April 1978 onwards will have a state pension age of 68
Who would an accelerated rise in the state pension age to age 68 have affected?
The impact of an accelerated state pension age increase to 68 would depend on the timing of that rise.
If the increase to 68 had been brought forward by seven years to 2037-39 – a proposal previously set out by the Government in 2017 – this could mean:
- Anyone born on or before 5 April 1970 would have a state pension age of 67 or younger
- Anyone born from 6 April 1970 – 5 April 1971 would have a state pension age between 67 and 68
- Anyone born from 6 April 1971 onwards would have a state pension age of 68
If the increase to 68 was brought forward to 2035-37, this could mean:
- Anyone born on or before 5 April 1968 would have a state pension age of 67 or younger
- Anyone born from 6 April 1968 to 5 April 1969 would have a state pension age between 67 and 68
- Anyone born from 6 April 1969 onwards would have a state pension age of 68
If the Government went for the nuclear option and the increase to 68 was brought forward to 2033-35, this could have meant:
- Anyone born on or before 5 April 1966 would have a state pension age of 67 or younger
- Anyone born from 6 April 1966 to 5 April 1967 would have a state pension age between 67 and 68
- Anyone born from 6 April 1967 onwards would have a state pension age of 68
What does recent life expectancy data tell us?
For decades, average life expectancy across the UK had been growing at a rapid rate. At the beginning of the 1980s, average life expectancy at birth was around 71 for men and 77 for women.
By 2017-19, average life expectancy had reached a record high of 79 for men and 83 for women. However, between 2018-20 average life expectancy for men dipped marginally, in part as a result of the pandemic.
Expectations of future life expectancy increases have also plummeted. For example, back in 2014 the ONS thought that by 2028 – when the state pension age will rise to 67 – the average life expectancy for a 67-year-old man would be 21.1 years, while for a woman it was expected to be 23.1 years.
However, the latest projections suggest that by 2028 the average life expectancy of a 67-year-old man will be 18.7 years, while for a 67-year-old woman it will be 20.8 years.
