"The news that further increases to state pension age have been delayed will be met with a sigh of relief from those who would have been affected."
The government has reportedly shelved plans to accelerate increases in the state pension age.
At present, the state pension age is 66 and on current plans is set to rise to 67 by 2028 and to 68 between 2044 and 2046, however it was thought that this could be brought forward to as early as 2035.
In his November Budget, chancellor Jeremy Hunt announced the outcome of a review of the state pension age would be shared early in 2023. There was speculation that this could be increased to 68 earlier than currently planned, especially after retaining the triple lock this April.
However, the Financial Times has reported that the government will now delay making a decision until after the next general election due to falling life expectency and concerns about the reaction from middle-aged voters.
Jon Greer, head of retirement policy at Quilter, said: "The Tories understandably look determined to try and claw back some public favour amongst its core voters by delaying its widely anticipated state pension age increase. The rumours come just as Boris Johnson faces a grilling over his partygate antics putting those lockdown scandals back at front of mind for many. Any increase would have proven incredibly unpopular whichever way you cut it. We may see more of these crowd pleasing policies as we head towards the general election.
"The plan to delay has been reportedly due to average lower life expectancy. However, it is forecast that the number of people over State Pension age will grow significantly over the next 20 years whilst the proportion of the working age population to support them will start to fall.
"The delay to increasing the age therefore does put the state pension’s long term sustainability into the spotlight and this could be the government simply kicking an inevitability down the road for the next party to take government to deal with. Overall the Government aspire to aim for ‘up to 32%’ in the long run as the right proportion of adult life to spend in receipt of the State Pension. As a compromise if they choose not to raise the age then it does not leave the Government with many levers it can pull.
"It may leave the Government with the choice of reviewing the triple lock and replacing it with a less generous uprating mechanism and/or accepting that funding for state pensions is going to increase through higher taxes (or national insurance). But it’s a question of what the general public would dislike least because we face difficult decisions."
Steven Cameron, pensions director at Aegon, commented: “It will be a big relief to many if as reported, the Government has shelved plans to accelerate increases in the state pension age. Having certainty and stability around when your state pension will commence is essential for future planning and official confirmation from the Government would be most welcome. There had been speculation that the state pension age might have been increased from age 67 to 68 a few years earlier than planned. If this had happened in 2035 rather than 2038, it would have meant millions currently aged between 52 and 55 would have had to wait a year longer to receive it.
“From 6 April, the state pension triple lock will deliver a 10.1% increase for state pensioners. While just falling short of the 10.4% inflation rate announced today, it is still good news for state pensioners. However, it comes at a high cost which is met from the National Insurance contributions of today’s workers. Many believed that to sustain funding, the Government would increase the state pension age sooner. However, life expectancy at retirement is now lower than previously assumed, which takes some pressure off the future cost of state pensions and avoids a controversial state pension age hike in the run-up to a General Election.”
Dean Butler, managing director for customer at Standard Life, added: “The news that further increases to state pension age have been delayed will be met with a sigh of relief from those who would have been affected. When rumours of a planned increase were first reported in January it prompted thousands of people to go online with 110,000 searches for ‘retirement age’ recorded. This was an 82% on the same period last year, highlighting just how significant the issue is for many people.
“Those currently in their early fifties were the first that could have been impacted by the changes and these would have been particularly challenging for a number of groups. Those planning to start accessing their personal savings before for state pension age would have had to consider whether they would have stretched far enough to bridge the gap, while others would have faced an extended period in the workforce.”
