"Statistics show improvements in life expectancy may be levelling off, meaning this increase may be less justified on affordability grounds."
The government says the new timetable will "maintain fairness between generations in line with continuing increases in life expectancy".
Latest projections from the Office for National Statistics show that the number of people over State Pension age in the UK is expected to grow by a third between 2017 and 2042, from 12.4 million in 2017 to 16.9 million in 2042.
Under the proposed new timetable, the State Pension age will increase to 68 between 2037 and 2039, earlier than the current legislation which sees a rise between 2044 and 2046. The change will affect everyone born between 6 April 1970 and 5 April 1978.
Data from the Pensions and Lifetime Savings Association shows that the proposal will affect more than 7 million people in their late 30s and 40s. The PLSA says group are also those most at risk of inadequate private saving as "they have not had the same access to final salary pension schemes as their parents and are too old to enjoy the full benefits of automatic enrolment that their children will see".
The changes mirror the timetable set out by John Cridland in March 2017, which proposed bringing forward the increase in State Pension age to 68 between 2037 and 2039.
Mr Cridland’s review highlighted that under the previous timetable, by 2036/37 annual spending on the State Pension would have increased by 1% of GDP on 2016/17, equivalent to £20 billion in today’s terms – or a rise in taxation of £725 per household.
Secretary of State for Work and Pensions, David Gauke, said: "I want Britain to be the best country in the world in which to grow old, where everyone enjoys the dignity and security they deserve in retirement.
"Since 1948 the State Pension has been an important part of society, providing financial security to all in later life. As life expectancy continues to rise and the number of people in receipt of State Pension increases, we need to ensure that we have a fair and sustainable system that is reflective of modern life and protected for future generations.
"Combined with our pension reforms that are helping more people than ever save into a private pension and reducing pensioner poverty to a near record low, these changes will give people the certainty they need to plan ahead for retirement."
Steven Cameron, Pensions Director at Aegon, commented: “It’s ironic that the Government is proceeding with an accelerated increase in the state pension age days after statistics show improvements in life expectancy may be levelling off, meaning this increase may be less justified on affordability grounds. A blanket increase in state pension age will be particularly concerning for those who through health concerns, job pressures or lack of employment opportunity simply can’t keep working into their late 60s.
"Requiring everyone to wait till an ever increasing age to draw a state pension is inflexible and increasingly out of sync with private pensions which can be taken from as early as age 55 and offer people a flexible and personalised transition into retirement. The clear message is that anyone who wants more choice over how and when they retire can’t rely solely on a state pension and should be reviewing their workplace or private pension provision.”
Ed Monk, associate director for Personal Investing at Fidelity International, added: "We should not be too pessimistic about retiring later. Being 68 years old in 2037 will not be the same as being 68 in 1948, when the modern state pension was introduced. In general we’re becoming healthier and more active in later life and so better able to cope with working longer. Having said that, the Government is right to identify the problems faced by workers in more physical jobs, and to encourage changes in the jobs market to help them cope with later retirement.
"By telling everyone now about this change, we do have a clear pathway as to when future generations should expect to retire. If you are around the age of 25, you can expect to retire at 70, if you’re 35 then it will likely be 69 and if you’re 45 then it’s going to be 68. This effectively gives the nation a clear expectation of where the State Pension Age is going for decades to come."
