The state pension age is set to rise to 68 by 2037-39, seven years earlier than previously legislated, according to a bombshell report. The move, confirmed by the Treasury to the Office for Budget Responsibility (OBR), will affect around five million Brits currently aged between 49 and 55, who will have to work an extra year before becoming eligible for their state pension.
Earlier Than Expected
The state pension age was due to increase gradually to 68 between April 2044 and April 2046, affecting those born between April 1977 and April 1978. However, the Treasury has now told the OBR that the increase will be brought forward by at least seven years, saving an estimated £6 billion a year from 2037.
The OBR stated: "We assume that the state pension rises to 68 in 2037-39. The Treasury has confirmed to us that this is the government’s current policy position, rather than the legislated increase set in the Pensions Act 2007."
Government Review
The move follows a review led by the Government Actuary's Department and Suzy Morrissey, deputy director of the Pensions Policy Institute. Torsten Bell, the pensions minister, confirmed that bringing forward the rise was under consideration, stating the Labour government wants to "make sure that we have a sustainable state pension for the longer term."
Sir Steve Webb, former pensions minister and partner at Lane Clark & Peacock, said: "Anyone checking the government’s pension calculator would assume that the pension age won’t be rising to 68 before the mid-2040s. But within government it is widely expected that the age increase will take place seven years earlier than the law currently says. That means around five million people will lose around £12,500 that they might otherwise have been entitled to. Ministers are going to have to be clear about this soon. If they want to increase the pension age in 2037 they are to have to legislate on this next year."
Official Response
A Treasury spokesman said: "The previous Government publicly committed to raising the state pension age to 68 between 2037 and 2039 and the OBR has reflected that position for years. The state pension age review, which will consider what the timetable for state pension age should be in the coming decades, is currently under way and we cannot pre-empt the outcome."
Ministers insisted that no final decision has been made on when the pension age will rise, but the OBR's assumption signals a significant shift in policy that could impact millions of Brits approaching retirement.
