Home Business NewsBusiness Government backs away from pre-election state pension age hike

Government backs away from pre-election state pension age hike

by LLB Reporter
23rd Mar 23 11:47 am

The government has backed away from controversial plans to accelerate the planned state pension age rise to 68, the FT reports.

The UK state pension age is set to rise to 67 by 2028 and 68 by 2046 based on the current timetable.

Reports surfaced earlier this year suggesting the rise to age 68 could be brought forward to the 2030s.

A review of the state pension age is due to be published by 7 May this year.

Tom Selby, head of retirement policy at AJ Bell, comments: “Accelerating the planned hike in the state pension age for millions of Brits would have raised billions of pounds for the Treasury, but it would also have been deeply unpopular and might well have cost the Conservatives the next general election.

“It would arguably have been viewed as unfair too, given the dramatic drop in average life expectancy we have seen in the wake of the pandemic, as well as the significant scaling back of future life expectancy growth projections.

“Going into a plebiscite telling voters they are living less long than previously thought and yet will have to wait longer for their state pension would have been a challenging sell on the doorstep to say the least. You only need to take a look over the Channel for an example of just how controversial changes to state pension age can be, albeit the system in France is not directly comparable to the UK.

“This is so blindingly obvious it is hard to escape the feeling we have all been played, with the government floating expectations of a faster state pension age rise, only to row back on the supposed ‘plans’ – much to the relief of those who might have been affected. Such cynical policymaking may well be effective, but it also risks undermining people’s confidence and trust in the wider pensions system.”

What has been happening to life expectancy in the UK?

“For decades, average life expectancy across the UK had been growing at a rapid rate. At the beginning of the 1980s, average life expectancy at birth was around 71 for men and 77 for women.

“By 2017-19, average life expectancy had reached a record high of 79 for men and 83 for women. However, between 2018-20 average life expectancy for men dipped marginally, in part as a result of the pandemic.

“Expectations of future life expectancy increases have also plummeted. For example, back in 2014 the ONS thought that by 2028 – when the state pension age will rise to 67 – the average life expectancy for a 67-year-old man would be 21.1 years, while for a woman it was expected to be 23.1 years.

“However, the latest projections suggest that by 2028 the average life expectancy of a 67-year-old man will be 18.7 years, while for a 67-year-old woman it will be 20.8 years.”

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