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Govt brings forward increase in state pension age

Pensions-savings-retirement-piggy bank

The Government has decided to bring forward the increase in the state pension age to 68 by seven years.

Adopting the recommendations of the Cridland review into state pension increases, the Government has confirmed that the state pension age will rise from 67 to 68 from 2037.

Speaking in the House of Commons today, Work and Pensions Secretary David Gauke said that the Government had to “face up to this long-term challenge not pretend it doesn’t exist.”

Gauke said that under Labour’s proposed timetable, state pension spending would be £20bn a year higher.

The Government added in a press release that “those affected by this proposed timetable will on average still receive more state pension over their lifetime than generations before them.”

By October 2020, the Government had already committed to increasing the state pension age from 65 to 66. By 2028 this was set to rise to 67 and then 68 by 2046.

Old Mutual Wealth head of retirement policy Jon Greer says: “Government deserve some credit for biting the bullet and taking the unpopular decision to increase the state pension age. However, it appears they were not convinced that more creative solutions were administratively viable.

“The ‘universal’ state pension age we currently operate under means that retirement age applies equally to everyone. While it is possible to delay retirement and take a higher pension in exchange, the same flexibility does not exist in reverse.”

Former CBI director John Cridland’s report was released in March, and said bringing forward the state pension age increases would cut state pension spending as a proportion of GDP by 0.3 per cent compared to what the Office for Budget Responsibility had projected.

The report also recommended scrapping the triple lock.

Greer says: “Today’s announcements are interesting in the context of the decision to maintain the triple lock, which causes the state pension to ratchet up ahead of inflation and earnings. The Conservatives had planned to end the triple lock, but conceded it in their negotiations with the DUP. So on the one hand they are maintaining state pension increases for today’s retirees, while at the same time telling people age 47 and under that they will have to work longer before receiving their state pension.”

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Too little too late. It should be 70 and it should come in for 2020.(Except for heavy manual work)

    • Trevor Harrington 20th July 2017 at 9:56 am

      In your analogy, Harry, who is going to decide what actually constitutes “heavy manual work” ?

      And, should we also include those people who have damaged their health by working 12 hours a day for 6 days a week over 40 years ?

      And, how much is it all going to cost to make your desired of assessments of who is a manual worker, who has damaged their health by other means …… ?

      OR … would it be simpler and more cost efficient (fewer civil servants in adjudication) to simply allocate a basic state pension to all the people, once they have achieved a certain age ?

      If your answer to that last question is yes, then presumably we need to devise a pension scheme where everybody contributes at source, through their income, probably into a national scheme, which will give a basic pension award to everyone, regardless of creed or category, and at a specific set age.

      Provided the Government of the day, concerns itself with overfunding in the years when there are fewer retirees, and short funding in the years when a bulge in the population comes to retirement, we should be fine … shouldn’t we?

      In fact … I think we should call it “The Basic State Pension” …..

      Harry, … Do you think it will ever catch on ?

      • I worked at least 60 hours a week for 48 years no health detriment. 10 years of which was heavy manual. In spite of what you infer we are not a nation of whimps.

        As to the definitions of heavy manual it isn’t rocket science. If the Chinese can manage to do it I’m sure we can too.

        I’m not advocating that we shouldn’t have a state pension so your irony is a bit lost. What I do advocate is that it isn’t available until age 70. When pensions were first introduced in the early part of the last century the retirement age was set at 70 when male life expectancy was around 50. BY the time we get to 1971 Male life expectancy was 68 (so they could expect 3 years on pension). In 2015 it was 79 so that gave them 14 years. If retirement age is increased to 70 it would still give them 9 years – 3 times as long as in 1971.

  2. Robert Milligan 19th July 2017 at 4:25 pm

    Harry I have a Full NI record going back to 1973, I have just turned sixty, I have seen my State Retirement age moved to 66, I already have forty four years of full NI contributions, by Sixty six I will have paid NI for fifty years, and yes nine of those years was in uniform So your last is a slap in the face, We are not living longer, its that more of us living as long as those who in the past sent young men to War, as we have become more sensitive to such belligerence of those who run the country, some of us should enjoy our retirement,

  3. Robert is that the millionaire Harry FCA talking ignore my friend and enjoy your retiremeNt at 66

    • I wish. Just a careful saver and more importantly watched what I spent. Yes I sold my business when I was 70, but then started another. I find it hard to comprehend those who just want to laze around. Sure I have plenty of other activities and also do a bit of travelling, but it can all be fitted in.

      I well remember when I was on the AIFA board the bleatings from so many who said they didn’t have the time to study for the required qualifications. I just asked what time the finished work, how much TV they watched and what the did on Saturday morning. That lead to more than a few red faces.

      I refuse to be believe that idleness is endemic – but it is a struggle!

  4. Trevor Harrington 19th July 2017 at 4:56 pm

    I quote –
    “The latest projections from the Office for National Statistics (ONS) show that the number of people over State Pension age in the UK is expected to grow by a third between 2017 and 2042, from 12.4 million in 2017 to 16.9 million in 2042.”

    This is NOT the same as saying that average life expectancy has increased. Indeed, the ONS stats quite clearly illustrate that average life expectancy is much the same now (at 84 male and 86 female) as was the case back in the 1970s and 1980s (providing you do not average back into the war years, when quite obviously life expectancy was very different for very obvious reasons!).

    What the ONS IS INDEED saying, is that there are more people expected to be in state pension age in the next 20 years ….

    Well that is hardly a surprise as the huge post war increase in the birth rate produced the “baby boomers”, who … first of all had their effect on house prices in the 1970s through to the 1990s, and secondly … they now want their state pensions.

    This is called DEMOGRAHICS and has absolutely nothing to do with life expectancy, and was totally predictable by all successive governments, all of whom chose to do nothing about it whatsoever. They preferred to leave the financial problem of as bulge in the population coming through to state pension age, to future generations, whilst they spent the intended NIS contributions on the Public Sector and their completely unaffordable working practices and their pensions.

    It is perfectly feasible to put the state pension age back to age 60 for all, but it will entail an £800,000 lifetime allowance, an immediate cessation of higher rates of tax relief on pension contributions, and a rapid curtailment of the huge inequality of Public Sector pensions over private pensions.

    Whilst many high salary earners, and the public sector in particular, would obviously rail against any of these suggestions, somebody, somewhere is going to have to start explaining it to them pretty soon if we are going to deal with the problem properly and fairly, rather than persist with these outright lies about life expectancy.

    Oh what tangled web we weaver … when at first we do deceive ….

    • High salary earners migh also rail against any attempt to make the pension rules do something about this inequity:

      The Government added in a press release that “those affected by this proposed timetable will on average still receive more state pension over their lifetime than generations before them.”…. those who will receive most are those who least need their pensions topping up by the state, because, as Sir Michael Marmot points out in his report yesterday, the better off you are the longer you tend to live…more so now than ever in the UK.

  5. Robert Milligan 19th July 2017 at 5:36 pm

    Trevor your almost right, if you recall the Younger Maggie T advised those who had only just recently been enrolled in the State Related Earnings Pension Scheme (SERPS)That if they opted out of SERPS in 1988 they would get the 1987 NI rebated as well, this was due to the fact, yes even then that the Governed of the day had already calculated that by 2020 the SERPS pension would be unaffordable, So the “Can has been kicked down the road” for the past thirty years, Get It out there when things are already bad !! Comes to mind , 911

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