Plan to raise pension age to 68 dropped

The government has confirmed that it will not go ahead with plans to raise the state pension age to 68

There will be a further review within two years of the next parliament to reconsider the rise but a fall in life expectancy has been a factor in the decision for a delay.

As expected, the state pension age will rise to 67 from the current 66 by the end of 2028, affecting those born after April 1960.

The Pensions Act 2014 requires the secretary of state for work and pensions to regularly review state pension age. To inform this review, two independent reports were commissioned – analysis from the government actuary based on life expectancy projections and the proportion of adult life spent in retirement, and findings from Baroness Neville-Rolfe which considered relevant factors including life expectancy trends.

Estimates suggest the number of people aged over 67 will increase from 12 million in 2025 to 18m in 2070.

This gives the government appropriate time to take into account evidence which is not yet available on the long-term impact of recent challenges, including the Covid pandemic and global inflationary pressures. These events bring a level of uncertainty in relation to the current data on life expectancy, labour markets and the public finances.

Secretary of state for work and pensions Mel Stride said: ‘It’s essential the state pension remains sustainable and fair across the generations. Our balanced approach will help achieve this and ensure we continue to provide security and dignity in retirement for millions of people across the country.

‘The government remains committed to the principle of providing 10 years' notice of changes to state pension age, enabling people to plan effectively for retirement.’

Looking for advice? Check out our full range of services. From payroll help to taxation advice, our expert team is available to lend a hand.