A rise in the state pension age is 'more likely' to be introduced sooner than planned in a bid to strengthen Britain's finances, an expert has said. The state pension age started to rise on May 6 and will continue to increase from 66 to 67 until April 6, 2028. Legislation requires an increase from 67 to 68 between 2044 and 2046, although this timetable is under review so the rise could come sooner than expected.
Expert Analysis on Earlier Rise
Dr Giray Gozgor from the University of Bradford said there is a meaningful possibility the Government will bring the rise to 68 forward, but cautioned this wasn't certain. He said: 'One plausible alternative would be an increase between 2037 and 2039, a timetable considered in earlier reviews.' The Associate Professor in Economics and Finance pointed to a previous government commitment that there has to be 10 years notice of a change. This would mean even if an earlier increase were announced relatively soon, it would be more likely to affect those who are some distance from retirement than people currently approaching state pension age, according to the expert.
Historical Context and Reviews
In 2017, an independent review led by former CBI boss, John Cridland, recommended raising the state pension age from 67 to 68 between 2037 and 2039. A third review of the state pension age was announced by the Government in July last year, led by Dr Suzy Morrissey, Deputy Director of the Pensions Policy Institute.
Ageing Population Drives Change
Britain's ageing population is a principal reason why the Government might want to bring the date forward. The number of people of pensionable age is projected to increase by 1.8 million or 14.6% in a decade - from 12.4 million in mid-2024 to 14.2 million by mid-2034. This compares to a projection of the UK's working age population growing by 3.4% over the same period. Dr Gozgor said spending on the state pension is likely to rise faster than the population needed to fund it through taxes. He pointed to figures from the Office for Budget Responsibility which estimate the increase from 66 to 67 will slash government borrowing by a net £10.5billion in 2029-30. Of this, £10.2bn is from around 820,000 fewer 66-year-olds drawing the state pension in that year.
Possibility of Rise Beyond 68
Asked if the state pension age could rise beyond 68, Dr Gozgor said: 'A future increase to 69 is plausible, particularly over several decades. An increase to 70 is possible in principle, but remains considerably more speculative.' He said pressure for further increases depends on factors, including longevity, healthy life expectancy, employment among older people, migration, productivity and the cost of maintaining the triple lock. This is a Government guarantee that the state pension will rise by the highest out of average earnings growth, inflation or 2.5%.
Policy Choices and Implications
Dr Gozgor added that increasing the state pension age is not the Government's only option, suggesting it could reform pension uprating, raise additional tax revenue, encourage greater private pension saving or accept higher public expenditure. He said: 'A higher pension age is therefore a policy choice, rather than an unavoidable mathematical consequence of population ageing.' On the implications, he suggested the impact of a rise beyond 68 would be 'highly unequal' as professionals in good health with private pensions would be able to adjust more easily than those in manual employment, with poor health and renting. He concluded: 'I consider an earlier rise to 68 considerably more likely than an imminent decision to increase the state pension age to 69 or 70... The central issue is not simply whether people are living longer on average. It is whether they are living longer in sufficiently good health to remain in employment and whether those required to wait longer for their pension have a genuine opportunity to continue working. A sustainable and politically defensible reform would therefore require lengthy notice, transparent evidence, stronger employment support for older workers and targeted protection for those who cannot realistically remain in work.'
