Chancellor George Osborne today confirmed that planned rises to the state pension age will be brought forward in a move estimated to save £500bn over the next 50 years.
In his Autumn Statement, the chancellor said the pension age needed to be kept in track with life expectancy. As such, the rise to 68 is to be brought forward to the mid 2030s, and the rise to 69 to the late 2040s.
The chancellor said the exact dates of the changes would be set by a statuary review and will take account of the latest demographic data.
Osborne added: 'This is one of those difficult decisions governments have to take if they're serious about controlling the public finances Young people will know our country can afford to give them a proper pension when they retire.'
The chancellor also confirmed that from next April the basic state pension would rise by £2.95 a week. Taken together with other state pension increases brought in by the government under the 'triple-lock', pensioners were over £800 a year better off, Osborne said.
Commenting on today's announcement, Jim Boyle, chair of the pensions board at the Institute and Faculty of Actuaries said the evidence for increasing longevity was overwhelming and as such the state pension age should be regularly reviewed.
But he added: 'The wide variation in expectation of life according to social class and geography brings out complex social and economic issues which will affect the cost of welfare as well as the cost of state pensions. Both of these issues should be considered when calculating the cost saving of increasing the state pension age.'
Sonel Mehta, head of actuarial resourcing at consultants Hazell Carr, noted that manual workers and those on lower incomes would be more severely penalised from any increases to the state pension age.
'Their life expectancy tends to be lower and therefore they already receive the state pension for fewer years than someone perhaps more well off who will have contributed for the same length of time,' she said.
Mehta added that although life expectancy was increasing, healthy life expectancy was not quite the same thing. 'This should form an important part in any decision-making on changes to the state pension,' she urged.
Morten Nilsson, chief executive of NOW: Pensions, observed that Osborne's decision to increase the state pension age formed part the government's wider goal of 'shifting' responsibility from the state to the individual when it came to funding retirement.
'But, the government's decision is logical and there is every chance that if life expectancy continues to increase, this number will be pushed higher,' Nilsson said.
'Increasing the state pension age is running in parallel with the introduction of automatic enrolment into workplace pensions. This policy is designed to encourage people to save for their own future and reduce reliance on the state pension.'