A decision on whether to bring forward a planned increase in the state pension age to 68 has been delayed until after the next election amid warnings life expectancy is now two years lower than previously forecast.
Work and pensions secretary Mel Stride announced the delay in the Commons on Thursday, when he told MPs a further review would be undertaken within two years of the next parliament.
Mr Stride had expected to delay any decision, amid falling life expectancy rates and riots in France over Emmanuel Macron’s plan to raise the retirement age from 62 to 64.
The UK state pension age is due to rise to 68 from 2044, and previous reports suggested that ministers could follow the recommendations of an independent review to bring that date forward, potentially to as early as 2037. However, there was growing speculation that it would instead be pushed back over fears of a backlash from middle-aged voters.
Mr Stride said that the current rules for the rise from 67 to 68 in 2044 “therefore remain appropriate and the government does not intend to change the existing legislation prior to the conclusion of the next review”.
He added: “I therefore plan for a further review to be undertaken within two years of the next parliament, to consider the rise to age 68 again.”
The Institute for Fiscal Studies (IFS) think tank has warned that every year of delay beyond 2037 in raising the pension age to 68 would cost the Treasury between £8bn and £9bn.
Mr Stride suggested it was still possible for the state pension age to be hiked to 68 by 2037, saying that holding the review in 2026 wouldn’t “preclude” a decision about the date.
However, the increase in life expectancy has slowed since the first state pension age review was undertaken in 2017. The government’s actuary shows that life expectancy at retirement for Britons is now two years lower than it was at that time.
Labour said that the stalling life-expectancy rates are a “damning indictment” of the government.
The work and pensions secretary announced the delay on Thursday
(PA)
Jonathan Ashworth, the shadow work and pensions secretary, said the decision was “the right one” but also “the clearest admission yet that a rising tide of poverty is dragging life expectancy down for so many”.
Jacob Rees-Mogg said the postponement was “not exactly a sign of strength”, arguing that taking the decision now would “give everybody the chance to plan well in advance”.
Jon Greer, head of retirement policy at management firm Quilter, said the delay suggested that the Tories were “determined to try and claw back some public favour”, adding: “Any increase would have proven incredibly unpopular.”
Despite Mr Stride’s decision to delay, the Neville Rolfe review published on Thursday argued that there should be a cap of 6 per cent of GDP on state pension spending.
If implemented, the state pension age would have to rise from 68 to 69 between 2046 and 2048 – which means anyone born after 1979 could have to wait until they are 69.
France has seen a huge wave of strikes and violent protests against Mr Macron’s push to increase the country’s legal retirement age from 62 to 64.
Unable to get a majority in the French parliament’s lower house for the unpopular reforms, Mr Macron rammed them through using a special constitutional power – which further inflamed protesters’ anger.
The review of the UK state pension age, conducted by Baroness Neville-Rolfe, is looking at which factors should be taken into account. The current pension age was decided in order to prevent people from spending more than a third of their adult life in retirement.
The current increases set out in law provide for a gradual rise in the state pension age to 67 for those born on or after 5 April 1960. Between 2044 and 2046, there will be a gradual rise to 68 for those born on or after 5 April 1977.
