State pension age may rise sooner as government launches review

Millions could face having to work for longer before they get their state pension.

The government has launched a review of the state pension age and will consider bringing forward the rise in the age at which people become eligible for the state pension to 68, from the current entitlement age of 66, to 2037-39. Currently, a gradual rise to 68 is planned between 2044 and 2046. The review will conclude in May 2023.

A rise to 68 from 2037 would affect people born from the early 1970s onwards, rather than those born since the late 1970s, potentially pushing full retirement back for millions more people.

The DWP said the review will:

• examine the implications of the latest life expectancy data;
• provide a balanced assessment of the costs of an ageing population and future state pension expenditure;
• consider labour market changes and people’s ability and opportunities to work over state pension age;
• and develop options for setting the legislative timetable for state pension age that are transparent and fair.

It added the review would consider regional inequalities as well as “the effects for individuals with different characteristics and opportunities”.

Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “Millions more people could face having to work for longer before they get their state pension as a result of this review. The idea of a long, enjoyable retirement seems set to be consigned to the history books.

“Many will have spent much of their working life expecting to retire at 65. They have been disappointed before and look set to be disappointed again. It’s no wonder today’s younger workers have little faith in the state pension being there for them at all when they stop work, with many thinking they’ll end up working forever.

“Continually moving the goalposts back like this doesn’t just provoke disillusionment, it has big implications for retirement planning.

“For those who find they can no longer work before they reach age 68 because of age-related ill health, the inability to claim state pension presents huge issues. The age at which people can expect to start to experience health problems that might prevent them working is around 63, which could leave many people facing several years where they either have to rely on private pension provision, which may be inadequate anyway, or other benefits.

“There are big inequalities in health and consequent ability to work for people in their 60s around the country. Life expectancy hasn’t been rising across the board recently and so does not offer the same justification it once did for endlessly increasing the state pension age.”