Key facts
- The UK government has initiated a review into the state pension age.
- The current plan is to increase the state pension age to 67 between 2026 and 2028.
- A further increase to 68 is scheduled for 2044-2046.
- Experts believe the rise to 68 may be accelerated due to fiscal pressures and rising life expectancy.
- Previous reviews have recommended bringing forward the increase to 68.
- The new review will examine factors like life expectancy, intergenerational fairness, and pension sustainability.
The UK government has initiated a review into the state pension age, prompting discussions about whether it could be raised to 68 sooner than currently scheduled. The current plan involves increasing the pension age to 67 between 2026 and 2028, followed by a rise to 68 between 2044 and 2046.
Experts are divided on the timing of the potential increase to 68. Some, like Tom Selby of AJ Bell, believe it is likely to be brought forward due to the state of public finances and increasing life expectancy. David Robbins of WTW suggests a move forward by a few years, aligning with budget watchdog projections. However, Sir Steve Webb, a former pensions minister, anticipates only marginal changes and notes that governments typically provide 10 years' notice for such increases, making a rise within the next decade unlikely.
Previous reviews, including the Cridland review and the Neville-Rolfe review, have recommended earlier increases to the state pension age. The Neville-Rolfe review, for instance, suggested a rise to 68 between 2041 and 2043, though the government did not adopt these recommendations beyond the planned increase to 67.
The latest review, led by Dr Suzy Morrissey, will consider factors such as linking the state pension age to life expectancy, intergenerational fairness, and the long-term sustainability of the pension system. Concerns about the rising cost of state pensions, which account for a significant portion of the welfare bill and are projected to increase as a percentage of GDP, are driving the need for this review. Some experts also suggest that beyond 68, pension ages could rise further, citing examples like Denmark's move to a retirement age of 70.
Rachel Vahey of AJ Bell highlighted that without policy intervention, state pension costs could escalate significantly, potentially forcing the government to consider reforms to the triple lock guarantee alongside pension age adjustments.