UK state pension age may rise to 68 in 2030s, reports say – what is going on?

0
8


The UK state retirement age could rise to 68 by the end of the 2030s, reports this week have claimed – prompting headlines about millions having to work longer and many being condemned to “misery and poverty”. But what is actually going on?

What has been announced?

Nothing – as yet. An article in the Sun claimed the UK state pension age (SPA) is set to rise to 68 sooner than many had expected. At the moment, nothing has been confirmed, but we should know more within a few months, possibly weeks.

The government is duty-bound to regularly review the SPA, and it is understood it must publish the results of the latest review by 7 May this year – but the Sun reported that the chancellor, Jeremy Hunt, was looking at announcing the move as early as the 15 March budget.

It claimed the Treasury wanted the change to 68 to come in as early as 2035 – affecting those who are 54 and under today. Some have talked about the change possibly taking effect in 2034.

What is the SPA exactly?

It is the earliest age at which an individual can start getting the state pension. It may be different to the point you can start receiving other pensions, such as any workplace-related entitlement.

For people reaching SPA now, it will be 66 for women and men. For those born after 5 April 1960, there will be a phased increase in SPA to 67, and eventually 68.

The SPA is due to rise from 66 to 67 by 2028. The next increase, to 68, is not due to happen until between 2044 and 2046, affecting those born after April 1977.

However, there has often been speculation this could be brought forwards. Indeed, an official review done in 2017 concluded that the next review should consider whether the increase to 68 should be moved to 2037-39.

To be fair to the government, it has always said the timetable for the increase in the SPA could change.

How would the plan affect the public?

Having to wait longer for your state pension could have a huge impact on millions of people, many of whom are struggling financially. In the current 2022-23 tax year, the full “new state pension” – for those who became pensioners after 6 April 2016 – is £185.15 a week. The full “basic state pension”, for those who reached SPA before that date, is £141.85 a week.

The charity Age UK said any government decision to accelerate the rise in the SPA “will condemn millions to a miserable and impoverished run-up to retirement – and often beyond, too”. Many people are in poor health by the time they reach even the current SPA, it added.

The financial impact of an accelerated SPA rise to 68 would depend on the timing. The website Interactive Investor calculates that bringing forward the increase to 68 from its latest date of 2046 to 2034 could mean a “lost year” of full state pension of £13,594 for workers aged 57, rising to £16,902 for workers aged 46.

The flipside – according to investment firm AJ Bell – is that the move “could be a huge money-spinner” for the government, raising tens of billions of pounds in revenue.

What about the row over raising the SPA for women?

In recent years, there has been a lot of controversy about women who argue they lost out because of the way recent changes to the SPA were introduced.

For decades, the SPA for women was 60. An increase to 65, phased in between 2010 and 2020, was included in the Pensions Act 1995, but in 2011, the coalition government pushed through a speeding-up of the process.

As a result, the SPA for women increased to 65 by November 2018, and then to 66 by October 2020. Many of those affected say they had always expected to receive their pension at 60, then discovered their SPA had increased by four, five or six years.

What is the government saying on the issue?

Not a lot. The Department for Work and Pensions said: “The government is required by law to regularly review the state pension age, the second of which will be published later this year.”



Source link