There are two parts to this policy: that state pension age reflects the increased life expectancy, and that each generation is treated fairly. We’re tracking both parts together (so basically an increase in the state pension age, but calculated ‘fairly’). Not easy, but read on…
Increases in the pension age have been driven by longer life expectancy and a desire to save public money. According to the government, “when the State Pension was introduced in 1948, a 65-year-old could expect to spend 13.5 years in receipt of it – around 23% of their adult life. This has been increasing ever since. In 2017, a 65-year-old can now expect to live for another 22.8 years, or 33.6% of their adult life.”
There have been several changes to the Pensions Act over the last three decades. These include planned changes from 2019, when the state pension age will increase for both men and women to reach 66 by October 2020. Other planned changes will increase the state pension age from 66 to 67 between 2026 and 2028.
The coalition government introduced a clause in the 2014 Pensions Act which demanded regular reviews of the state pension age. The current government published just such a review in 2017, which proposes the pension age be increased to 68 sooner than planned – between 2037 and 2039, rather than from 2044. Essentially this review accepts the recommendations made in March 2017 by the Cridland Report.
The 2017 review mentions:
“In order to keep the State Pension sustainable and maintain fairness between generations in the future, the Government will aim for up to 32% in the long run as the right proportion of adult life to spend in receipt of State Pension.”
The government’s review does uses life expectancy to determine pension age, but whether its 32% measure addresses the issue of fairness between generations is something we will have to collect a range of opinions on. For now, given that the review is not legally binding yet and further reviews will take place before legislation is passed, this policy is ‘in progress’.
Love the detail? You’re in luck…
- State pension age rise brought forward – BBC
- State Pension age independent review: final report (also known as the Cridland Report) – Gov.uk
- State Pension Age Review – Gov.uk, Department of Work & Pensions
- Proposed new timetable for State Pension age increases – Gov.uk
- Your State Pension explained – Gov.uk
- The State Pension – The Pensions Advisory Service
- Changes to State Pension age – Age UK
- Pensions Act 2014 – Gov.uk