Five million people could be forced to wait an extra year to receive the state pension, as Treasury officials have reportedly told the Office for Budget Responsibility (OBR) that the “current policy” is to raise the state pension age to 68 as early as 2037, according to The Times.
The retirement age is currently scheduled to gradually increase to 68 between April 2044 and April 2046. However, the previous Conservative government committed to raising it to 68 by 2037, up to seven years earlier. Labour began a review of the state pension age last year, and ministers have insisted that no final decision has been made. The OBR reportedly stated: “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 Response and Impact
A government spokesperson insisted: “This is not new information.” They added: “The State Pension age review, which will consider what the timetable for State Pension age should be in the coming decades, is currently underway and we cannot pre-empt the outcome.”
Bringing forward the rise would mean that about five million people currently aged between 49 and 55 would have to work or wait an extra year before being eligible for their state pension, costing them approximately £12,500 each. The change would save the government about £6 billion a year from 2037, compared with the current timetable.
Expert Reactions
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said: “The state pension remains a critical element of retirement incomes in the UK for millions of people, and the reports that state pension age increases could be accelerated are a reflection of the difficult balancing act government faces in keeping the system affordable while people live longer, and ensuring it remains fair and adequate for those who rely on it.”
She added: “The challenging reality is that our research shows the pressures are already being felt most acutely by those least able to adapt to the current increase. Over a quarter of those directly affected by rises in state pension age say they are struggling to make ends meet day-to-day – compared to just one in seven of those above state pension age – and more than a third of people in their early 60s say they expect they will need to work for longer as a result.”
Alternative Policy Options
Former pensions minister Ros Altmann warned that raising the pension age was not the best way to cut costs. “Better policy options include reforming the triple lock and increasing the number of years needed for a full State Pension,” said Baroness Altmann. “Increasing the State Pension Age will mean least well-off older people are penalised.”
Sir Steve Webb, another former pensions minister and a partner at the consultancy Lane Clark & Peacock, said: “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.”
