The Government is right to take a “wait-and-see” approach to raising the state pension further, according to some experts.
But some raised concerns around the potential for future increases in the decades ahead.
The state pension age rise to 67 will take place, as planned, between 2026-2028, the Government has confirmed.
But there will be a further review to reconsider plans to raise the state pension age to 68. This will happen within two years of the next Parliament.
There had been reports that the rise from 67 to 68 could be brought forward to the 2030s, rather than from 2044.
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— Baroness Ros Altmann
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 continued: “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.”
Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association (PLSA), said: “The Government has today confirmed that it has no plans to change the current timeline to increase the state pension age to 68.
“This is a very positive step for future pensioners as most people will rely heavily on the state pension to make up the majority of their retirement income.
“As an increase in the state pension age falls disproportionately on people with lower incomes – who generally have poorer longevity – this decision, along with the 10.1% rise in state pension next month, will support those who need it most.”
This is a very positive step for future pensioners— Nigel Peaple, PLSA
Dr Carole Easton, chief executive at the Centre for Ageing Better, said: “While we welcome the announcement by the Government not to bring forward the timeline for increasing the state pension age to 68, the uncertainty around the state pension age timelines is unhelpful.”
Sir Steve Webb, another former pensions minister, 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.”
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “It remains a tricky balancing act.
“Our ageing population makes the state pension eye-wateringly expensive, and any government needs to be acutely aware of the need to support the older population without placing undue demands on younger workers.
“Increasing state pension age was one lever the Government could deploy but it looks like it’s becoming much more difficult to do so.”
