Legislation is in place for the state pension age to go up from 66 to 67 and then to 68 over the coming years. One consideration for ministers in reassessing the state pension age average is how average life expectancy changes.
Pensions actuary Kevin Hollister, founder of Guiide, warned the state pension age increase may be accelerated despite life expectancy figures indicating there is “no reason” for the change.
A recent report from The Sun said the Government is considering changing the rule so the state pension age reaches 68 as early as 2035.
Many analysts have suggested the state pension age review, set to be published by May this year, could include plans to move forward the staged increase.
Mr Hollister said: “Life expectancy changes will show there is no reason for it to rise quicker. In fact, it will probably show planned increases should be reversed to be fair.
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“Despite this, existing planned rises will be maintained, and I am sure these will even be increased more quickly to save future costs.”
The pensions expert spoke about how this may be justified by ministers. He said: “At a guess, the messaging will be birth rates are lower, people are leaving the workforce earlier, there are not enough expected future workers to support expected future retirees, therefore the state pension age needs to rise more quickly than planned, despite no increases in life expectancy.”
Stuart Price, partner and actuary at Quantum Advisory, told Express.co.uk the recent dip in life expectancy may be viewed as a “short term blip” and not affect plans to bring forward the pension age increase.
He said: “Over the last 10 to 15 years, life expectancy has been improving and improving, but we have seen over recent years more of a levelling out – and now even coming down a bit as well.
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“There are a number of reasons around this, and one of the big thoughts is the stress on the NHS and peoples’ lifestyles.
“Life expectancy is reducing but not by a drastic amount. So, the Government might say this is just a short term blip, and eventually it might go back up again.”
Under current Government plans, the state pension age is set to increase to 67 by 2028 with the move to 68 to take place between 2044 and 2046.
Some pensions analysts are predicting the move to 68 will be brought forward to the mid-2030s which could affect people currently in their early 50s, who may have been hoping to retire at 67.
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People with gaps in their record can voluntarily buy National Insurance credits to go towards their state pension.
Another aspect of the state pension policy which is under scrutiny is the triple lock guarantee, which ensures payments increase each year in line with the highest of 2.5 percent, the rise in average earnings or inflation.
The September 2022 figure for inflation was used to calculate this year’s increase, the largest ever single increase in payments.
Many analysts believe the policy will become unsustainable in future years as the Government struggles to find the extra money for the payments.
