Restrictions on the increase in state pension age

Kevin Peachey
BBC News Personal finance correspondent

Publiziert
Image source, Getty Images

A new report suggests that plans to increase the age of state pension from 66 need to be scrapped because people aren’t living as long as they had hoped.

The current plan would increase the eligibility for state pensions to 67 years by 2028. It could then be reduced to 68.

LCP consultant says the life expectancy has stagnated and that no adjustments should be made in 30 years.

Just recently, the government launched its most recent review of state pension age.

Presently:

  • The full, new flat-rate state pension (for those who reached state pension age after April 2016) is £179.60 a week
  • The full, old basic state pension (for those who reached state pension age before April 2016) is £137.60 a week. A Pension Credit credit may be available to them.

Both men and women can now claim the state pension starting at 66, an age that has been steadily increasing since October 2013.

According to government plans, the state’s pension age will rise from 67 in this decade to 68 by 2039.

It is calculated based upon the assumption that retirement will not take up more than one-third of an adult’s life.

Official estimates of life expectancy have fallen since these plans were created, including before the Covid pandemic.

LCP therefore argues that the shift to 67 must not occur before 2051 and the rise of 68 should not happen prior to the middle-2060s.

Such an initial move would benefit 20 million people born in the 1960s, 1970s or early 1980s, but cost the Treasury an estimated £200bn.

Steve Webb is a partner in LCP, he was formerly a pensions minister. He said that the new analysis has blown away government plans to increase state pension age rapidly.

“Even though the epidemic hit, improvements in life expectancy that we’d seen over the past century were almost at an end, but the state’s schedule to increase the age of retirement hasn’t caught up with the new world.”

He stated that the government should reconsider its plans as “a matter for urgency”, and that there was no case to increase the state’s pension age so quickly.

  • The age of state pension is 66. This number will rise.
  • For one year, triple lock pension pledge suspended

The Department for Work and Pensions announced earlier this month that Baroness Neville Rolfe would be leading the next state pension age review.

The government must ensure that its decisions about how it manages costs are fair, transparent, and robust for both taxpayers and the public. It should also make sure that, as retirement plans and financial security become more complex, the state pension remains a solid foundation,” said the DWP.

According to pension experts, there should be a change in how state pension ages will be calculated.

Former pensions minister Baroness Rosaltmann also stated that the current system benefits the wealthy and healthy, but does not help those who are likely to be sick.

The state pension is only flexible for people who can wait and are wealthy. They can get a larger amount if they begin their pension earlier. She said that those with poor health and no private provision cannot receive any money earlier, even at a lower rate.

Becky O’Connor is the head of savings and pensions at Interactive Investor. She stated that “the idea of an enjoyable, long-term retirement appears to have been relegated to history.”

“Many people will be expecting to retire at 65 after they have worked long and hard. These people have already been disappointed and are likely to continue being disappointed. Today’s young workers are not confident that their state pension will be there when they quit work. Many believe they will continue to work forever.

Source: BBC.com

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