Millions of people born in the 1970s may have to wait longer to collect their UK state pensions if a government review, which was announced this week, recommends bringing forward plans for a retirement age of 68.
The state pension age rose to 66 last year, with two further rises planned, meaning that by 2046 those born on or after April 1977 would need to wait until 68 before they can draw the benefit.
However, the review will look at bringing forward that change by eight years, so that the increase is phased in between 2037 and 2039.
The state payment is paid to anyone who has made at least 10 years’ worth of national insurance contributions during their working lifetime. The maximum payment is £179.60 a week, but how much you get depends on how many years you contributed for.
The government is obliged to regularly re-evaluate the state retirement age, and it must publish the results of the latest review by 7 May 2023.
It said Britain’s ageing population meant it needed to make sure decisions on how to manage the cost of the state pension system were “robust, fair and transparent for taxpayers now and in the future”.
The review will also look at the way the pension age is set, and what data could be taken into account when deciding on a fair retirement age.
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Becky O’Connor, the head of pensions and savings at the website interactive investor, said: “The idea of a long, enjoyable retirement seems set to be consigned to the history books.
“It’s no wonder today’s younger workers have little faith in the state pension being there for them at all when they stop work, with many thinking they’ll end up working forever.”
She added: “For those who find they can no longer work before they reach 68 because of age-related ill health, the inability to claim state pension presents huge issues. The age at which people can expect to start to experience health problems that might prevent them working is around 63, which could leave many people facing several years where they either have to rely on private pension provision, which may be inadequate anyway, or other benefits.”
Helen Morrissey, a senior pensions and retirement analyst at Hargreaves Lansdown, said: “While it had been proposed that the increase in state pension age to age 68 should be moved forward to 2037-39 – from 2044-46 – an analysis of the latest life expectancy data as part of this review could stop this in its tracks.”
Morrissey said the review it could also prompt a closer look at the pensions triple lock – the government promise to link pension rises to earnings, inflation or 2.5%, which ever it higher. That policy has been partly suspended this year as a result of high wage rises.
One issue that has been raised by some critics of the current system is the impact of different life expectancy rates around the country.
A recent report found that while a man living in the London borough of Westminster could be expected to live until the age of 84.7 years, in Blackpool it would be 74.1 years.
