Queen's Speech: UK to review State Pension Age
UK - The Queen today confirmed that the new coalition government in the UK would set a timetable for reviewing the State Pension Age.
Speaking at Westminster in the House of Lords, the Queen told the assembled politicians that her government's legislative programme would "be based upon the principles of freedom, fairness and responsibility". She said "The first priority is to reduce the deficit and restore economic growth."
However, she added the tax and benefits system of the UK would be made "fairer and simpler", and in addition to changes to National Insurance and sanctions for those that refuse jobs, she noted, "the timetable for increasing the State Pension Age will be reviewed".
It is also expected that the new Pensions Bill mentioned in the Queen's Speech will allow for the phasing out of the existing default retirement age of 65 and the reinstatement of the earnings link to the Basic State Pension from as early as next year. (See earlier IPE article: DWP to face a £535m spending cut ahead of new Pensions Bill)
Towers Watson commented that the inclusion of a Pensions Bill in the Queen's Speech could be the first step towards a much faster rise in the State Pension Age. In the coalition agreement, the government had stated that, subject to the outcome of a review, it would revise the current timetable for increasing the State Pension Age but that it would not start to rise above 65 until at least 2016 for men and 2020 for women. Previously, the timetable from the Labour government had the State Pension Age rising gradually for both sexes from 65 to 66 between 2024, and 2026 to 68 by 2046. (See earlier IPE article: UK Conservatives plan to speed up pension age increase)
John Ball, head of defined benefit consulting at Towers Watson, said: "The new government has only limited its freedom of manoeuvre for people in their fifties and sixties. While attention has focused on how soon the State Pension Age will rise to 66, the bigger question is what happens afterwards. Rather than rising to 68 by 2046, we could see it going up further and faster. In Ireland, it is set to reach 68 by 2028."
Ball noted that official projections of life expectancy have been revised dramatically since the current timetable was drawn up. He said: "The logic used to justify a State Pension Age of 68 by 2046 could now justify a State Pension Age of 70 by then - and that's before you factor in any need to make state pensions cheaper because of what has happened to the public finances."