Ministers have delayed plans to raise the state pension age to 68 amid falling life expectancy in the UK and warnings from Tory MPs that the move could provoke a backlash from middle-aged voters.
The state pension age, currently 66, is due to increase to 68 after 2044. The government wanted to bring this forward to 2037-2039, with the plan due to be confirmed in May, but will now push the decision beyond next year’s election, according to officials.
Raising the state pension age is highly controversial — the issue has caused riots on the streets of France — and Tory MPs have urged the delay, arguing that ordinary voters would resent having to work longer at a time when chancellor Jeremy Hunt has just relaxed tax rules on pensions for the wealthy.
One senior Tory MP warned of the “critical juxtaposition” of scrapping the £1mn lifetime allowance for pension savings while asking ordinary voters to work until 68 for a state pension.
Government insiders deny any link, insisting ministers needed more time to consider falling life expectancy data, which had been skewed by the Covid pandemic, along with other information such as 2021 census data.
“They were gung-ho to raise the pension age,” a government insider told the FT. “But they got cold feet.”
Harriett Baldwin, Tory MP and chair of the Treasury committee, said she would have been surprised if the government had made any “big changes”, partly because “we are in the year before an election”.
Sir Steve Webb, a former pensions minister and now partner with LCP, an actuarial consultancy, said: “The improvement in life expectancy at retirement that was predicted at the time of the last [pension age] review, basically didn’t happen. Life expectancy at retirement now is two years shorter than it was when they did the last review.”
Baroness Ros Altmann, a former pensions minister, said the costs of long-term state pension provision may already be “overestimated”, because of the fall in life expectancy projections.
“This is of course partly due to the pandemic’s impact on older people, but the ongoing NHS backlogs and crisis in elderly care are also likely to prevent a sudden resumption of life expectancy rises,” said Altmann.
The state pension bill is estimated to grow to around £148bn by 2027/28 from £110bn in 2022/23, according to the Office for Budget Responsibility.
David Gauke, a former Tory MP and the minister who announced the faster pension age rise in 2017, said it “may not be politically wise” to push through the pension age rise at this point in the electoral cycle but he added “for the long-term sustainability of the public finances an acceleration of the increase in the SPA is almost “certainly necessary”.
A spokesperson for the Department for Work and Pensions said: “The government is required by law to regularly review the state pension age and the next review will be published by 7 May.”
