The UK’s state pension age could potentially increase to 70 or beyond in the coming decades, driven by rising financial pressures on the Department for Work and Pensions (DWP). The need for reform stems from the growing strain on the state pension system due to factors like increasing life expectancy.
The DWP has indicated that the state pension age could be adjusted in the future, but specifics remain unclear at this point. According to the Birmingham Mail, discussions on this topic are ongoing, and future changes to pension rules will depend on the economic outlook and public finances.
Factors Driving the Potential Increase
According to Chris Ball, CEO of Hoxton Wealth, increasing life expectancy and the strain on the state pension system make it feasible that the pension age could be pushed beyond 68. He stated,
If you consider the increasing life expectancy in the UK and because of this, the financial strain on the state pension, it’s entirely feasible that we could see the pension age increase to 70 or even beyond in the coming decades.
A gradual increase to age 68 has already been legislated, but a rise to age 70 could become a reality by the 2040s, depending on the state of public finances. Ball added,
We could see the pension age pushed up to 70 by the 2040s based on current trends.
Current State Pension Age and Future Projections
Currently, the state pension age for both men and women is 66 years. Between 2026 and 2028, it is set to increase to age 67, with a further rise to 68 scheduled between 2044 and 2046. These adjustments have been legislated under the Pensions Act 2014, which mandates regular reviews of the state pension age.
The Role of the Pensions Commission in Future Decisions
The third state pension age review will assess whether current pensionable age rules are appropriate. This review will consider life expectancy data and reports from experts, including an independent review led by Dr. Suzy Morrissey and findings from the Government Actuary to examine the latest life expectancy projections.
As Chris Ball pointed out, while the increase to age 68 has already been legislated, any decision to increase it to 70 will depend on the strength of public finances. He emphasised that
A gradual increase to age 68 has already been legislated, but whether the age will increase to say 70 will depend on the strength of public finances.
Furthermore, Ball also stressed the need for fairness in the process, noting,
However, any Government that seeks to enact this will have to consider that people who have worked for most of their lives have sufficient support from the state in their later years.
Labour Party Pensions Minister Torsten Bell MP has emphasised that the revived Pensions Commission’s role will be to examine the UK’s pension system comprehensively. The goal is to create a strong, fair, and sustainable pension system for the future. Bell explained that the Commission’s objective is:
Building a strong, fair and sustainable pension system fit for the middle of the twenty-first century.
