Published: Thu, July 20, 2017
Markets | By Terence Owen

Rise in State Pension age brought forward by seven years

Rise in State Pension age brought forward by seven years

The revised timetable has been roundly welcomed by the industry, with some commending the government on biting the bullet despite political pressure and uncertainty.

It's still the case that the state pension is likely to form the lion's share of the retirement income for a majority of people - so delaying the age at which you get it is a serious step, and should not be embarked upon lightly.

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

This is the first government review of the state pension. "While improvements in life expectancy have stalled in recent years, over decades the state pension system has become increasingly unaffordable".

'Labour wants a different approach, in our manifesto we committed to leaving the state pension age at 66, ' she said.

Gowling WLG director Christopher Stiles added that occupational schemes will need to consider how their rules interact with the SPA.

Latest projections show that the number of people over state pension age in the United Kingdom is expected to grow by a third from 12.4 million to 16.9 million between 2017 and 2042.

The Cridland report stated that the age for state pensions should rise to 68 by 2039 instead of 2046.

Mr Gauke's announcement means the increase in the pension age will now come into force from 2037 and not 2044 as stated in legislation
Mr Gauke's announcement means the increase in the pension age will now come into force from 2037 and not 2044 as stated in legislation

The Government has been accused of "picking the pockets" of millions of people in their forties after announcing that anyone born between 1970 and 1978 will have to wait for an extra year before receiving their state pension.

However, the government has said it will not legislate for the increase before the 2023 review, pushing the onus onto the next government.

A number of MPs also expressed disappointment that Gauke had chosen to raise the pensions age rather than take the opportunity to reverse the government's policy for so-called Waspi women - those born in the 1950s who have seen their pension age rise faster than expected. "This will help those people who need to work longer before they receive their state pension to make smarter financial choices to boost their savings". But from 2010, the retirement age for women was bought into line with men.

Tom Selby, senior analyst at AJ Bell, said because of this opposition from other parties it would be very hard for the government to secure the votes needed to make the change.

"There is a balance to be struck between funding of the state pension in years to come whilst also ensuring fairness for future generations of taxpayers".

John Cridland, former director-general of the Confederation of British Industry and the author of the independent report, said the aim was to "smooth the transition for tomorrow's pensioners, and to try and make the future both fair and sustainable".

"This proposal will affect more than 7mn people in their late 30s and 40s - the sandwich generation", he said.

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