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.”