Speculation around whether the Department for Work and Pensions (DWP) would bring forward changes to the official retirement age have been circulating for some time. Now, The Secretary of State for Work and Pensions has confirmed that a review is “under way”.
Mel Stride MP told the House of Commons that he will consider a wide range of evidence, including two independent reports, to assess whether the “rules on pensionable age remain appropriate”, reported Daily Record. One report, from the Government Actuary’s Department, explores matters such as life expectancy. The other, from Baroness Neville-Rolfe, is on the metrics that should be taken into account in determining when the next increase in the State Pension age should occur.
The Department for Work and Pensions (DWP) boss said that the financial impact on pensioners would be taken into account. Age UK warns that accelerating the rise of the State Pension age “will condemn millions to a miserable and impoverished run up to retirement”.
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The outcome of the UK Government’s second review of the State Pension age is due to be published before the deadline on May 7, 2023.
Mr Stride said: “We certainly take into account issues such as pensioner poverty, on which we have an excellent record. In fact, relative pensioner poverty before housing has halved since 1999, and there are 400,000 fewer pensioners in absolute poverty - that is before or after housing - compared with 2009-10.”
State Pension age review - what it's all about
This latest review into the official age at which someone can retire, currently 66 for both men and women, launched at the start of last year and is considering whether the rules around pensionable age are appropriate, based on the latest life expectancy data and other evidence. Pension experts have said the UK Government faces a “tricky balancing act” in supporting an ageing population.
State Pension age is regularly reviewed to make sure that it is affordable and fair as people are living longer and spending a greater proportion of their adult life in retirement than in previous years. Two further increases currently set out in legislation indicate a gradual rise to 67 for those born on or after April 5, 1960 and a rise to 68 between 2044 and 2046 for those born on or after April 5, 1977.
However, new reports suggest that it could rise to 68 by the end of the 2030s, affecting everyone currently aged 54 and under. The Sun reported earlier this year that people born in the 1970s and later may be told they must work for longer as early as the March Budget - ahead of the planned publication of the State Pension review.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said: “The UK Government faces a tricky balancing act with the State Pension - we have fewer working age people supporting an increasing ageing population and costs are enormous.
“However, we also have to face the very real prospect that many people simply are not well enough to work until age 68. Added to this, rapid increases in State Pension age have disrupted people’s financial planning.
“With the debate around the Triple Lock continuing to rage we need to have a proper thorough review of the State Pension to give people more certainty over how and when it is paid so they can plan ahead.”
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.
With all these proposed changes it can be tricky for people to know exactly when they will qualify for State Pension and be able to retire.
Fortunately, the UK Government has provided a free and easy to use online tool which gives an exact date for State Pension qualification, just by entering your gender and date of birth. Click on this 'Check you State Pension age' link to be taken to the Government website. It will help you plan your retirement income.
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