State pension age may rise to 70
Recent reports suggest that the government is planning to raise the official state pension age to 70 for those currently in their 20s. As a more aggressive timetable for increasing state pension age is apparently to be introduced, those in the 45-55 age bracket could be set to receive their state pension when they are 68, whilst those aged between 30 and 45 may have to wait until they are 69.
The current state pension age is 65, with a timeline in place to gradually increase this, firstly to 66 between 2018 and 2020, then to 67 between 2026 and 2028, and then 68 between 2044 and 2046. However, during the official review currently being carried out, the Department for Work and Pensions (DWP) requested that the Government Actuary’s Department (GAD) look at projected life expectancy in the future.
Previously, the government announced its policy of ensuring people spend two thirds of their adult life working and the remaining third in retirement. Speculation that this may change has been sparked by the DWP’s request to see figures for people spending 32% of their adult life in retirement, which is lower than the 33.3% dictated by the previous commitment to one third. The DWP has defended this request by saying that the figure “reflects the experiences of those reaching state pension age over the last 20 years”. However, a move to 32% would push the state pension age further out much more quickly than previously planned.
“If the government is planning to force tens of millions of people to work to 68, 69 or even 70, then it should be transparent about its plans”, said Steve Webb, a former pensions minister now working at mutual insurer Royal London as director of policy. “This would be a huge shift and should be properly debated, not buried in a technical document seen only by specialists.”
There are also fears that the state pension ‘triple lock’ – which ensures that pension payments will rise in line with the highest of either inflation, average wages, or 2.5% – will soon be watered down. The minister in charge of pensions, Damian Green, recently failed to guarantee the future of the triple lock by saying that the government would need to keep an eye on the economy between now and 2020 before making a decision.