The UK’s state pension age (SPA) will rise to 68 seven years earlier than currently planned, the government has announced.
It also outlined plans for further increases, meaning the SPA would reach 70 by 2056.
David Gauke, secretary of state for work and pensions, told parliament today that the increase would take place between 2037 and 2039, following a recommendation made by John Cridland’s review of the UK’s state pension system.
In his foreword to the government’s report, published today, Gauke said the change would save £74bn (€83.6bn) by 2045-46.
“Increased longevity is a triumph of improved health and better living standards,” Gauke said. “But an ageing population also presents us with some profound challenges.”
He added that the only alternatives to bringing forward the SPA increase would be to lower payments to pensioners or increase the payments made by workers to fund the state pension.
Currently, the SPA is due to rise to 66 by 2020 and to 67 by 2028.
The government said it would conduct a further review before finalising the SPA increase “to enable consideration of the latest life expectancy projections and to allow us to evaluate the effects of current rises in state pension age”. Recent longevity data has suggested that improvements to UK life expectancy have plateaued.
In addition, the report also outlined the government’s intention to cap the proportion of a person’s working life in which they can receive the state pension at 32%.
The report said: “In order to keep the state pension sustainable and maintain fairness between generations in the future, the government will aim for ‘up to 32%’ in the long run as the right proportion of adult life to spend in receipt of state pension. A 32% timetable is consistent with the average proportion of adult life spent above state pension age experienced by people over the last 25 years.”
According to calculations from the Government Actuary’s Department, capping this figure would mean further rises in the SPA, to 69 by 2042 and to 70 by 2056.
John Cridland’s review also recommended that the UK’s triple lock be scrapped. This was introduced in 2010 as a guarantee that the state pension would be increased annually by the higher of wage inflation, price inflation, or 2.5%.
However, the ruling Conservative Party’s plans to remove the triple lock were scuppered following last month’s election. Prime minister Theresa May was forced to drop the proposal as part of an agreement with Northern Ireland’s Democratic Unionist Party to support the Conservatives in parliament.