The government decision on raising the state pension age to 68 was postponed this week because increases in life expectancy have been slower than expected.
The move followed the publication of the government’s State Pension Age Review 2023. A decision will now not be taken until after the next general election.
Work and pensions secretary Mel Stride told parliament that slower life-expectancy rates had brought down the probable annual cost of the state pension during the next 30 years. He has commissioned another review into the issue, which will report within two years of the new parliament.
“Given the level of uncertainty about the data on life expectancy, labour markets and the public finances, and the significance of these decisions on the lives of millions of people, I am mindful a different decision might be appropriate once these factors are clearer,” he said.
Under current plans, the state pension age of 66 is due to rise to 67 in a phased introduction between 2026 and 2028, and then to 68 between 2044 and 2046 – affecting people born after April 1977.
“Increasing longevity has been the driving force behind previous rises in the state pension age and it is right that government properly assesses longevity trends before accelerating any planned increase in state pension age,” said IFoA president Matt Saker.
Canada Life technical director Andrew Tully said significant changes in the make-up of the UK population will have a direct bearing on the state pension system. By 2045, the number of people of pensionable age will have grown to 15.2 million – a 28% increase on the 2020 level. The number of people aged 85 and over is projected to almost double to 3.1 million during the same period. Meanwhile, the working-age population will increase by around 4.5% by the mid-2030s and remain around that level to 2045.