New State Pension age review could mean people will need to work longer before retiring
The State Pension age is regularly reviewed to make sure that it is affordable and fair as people are living longer and spending a greater proportion of their adult life in retirement than in the past.
The DWP has previously explained the reason for the review is because "when the State Pension was introduced in 1948, a 65-year-old could expect to spend 13.5 years receiving the benefit, around 23 per cent of their adult life".
However, this has been increasing ever since and it is now estimated that a 65-year-old can expect to live for another 22.8 years, or 33.6 per cent of their adult life in retirement.
The latest projections from the Office for National Statistics (ONS) show that the number of people over State Pension age in the UK is expected to grow by a third to 16.9 million in 2042.
This second review will consider whether the rules around pensionable age are appropriate, based on the latest life expectancy data and other evidence.
State Pension age is currently 66 and two further increases are currently set out in legislation.
- a gradual rise to 67 for those born on or after April 5, 1960
- a gradual rise to 68 between 2044 and 2046 for those born on or after April 5, 1977
The first review of State Pension age was undertaken in 2017 and concluded that the next review should consider whether the increase to age 68 should be brought forward to 2037-39 before tabling any changes to legislation.
The DWP said: “As the number of people over State Pension age increases, due to a growing population and people on average living longer, the government needs to make sure that decisions on how to manage its costs are robust, fair and transparent for taxpayers now and in the future.
“It must also ensure that as the population becomes older, the State Pension continues to provide the foundation for retirement planning and financial security.”
The review will consider a wide range of evidence, including:
- Examining the implications of the latest life expectancy data
- Providing a balanced assessment of the costs of an ageing population and future State Pension expenditure
- Consider labour market changes and people’s ability and opportunities to work over State Pension age
- Developing options for setting the legislative timetable for State Pension age that are transparent and fair
The Pensions Act 2014 requires the UK Government to regularly review State Pension age, and in accordance with law, this latest review must be published by May 7, 2023.
With all these proposed changes it can be tricky for people to know exactly when they will qualify for State Pension and be able to retire.
Fortunately, the UK Government has provided a free and easy to use online tool which gives an exact date for State Pension qualification, just by entering your gender and date of birth.
The tool provides information on when the user will:
Reach State Pension age
Qualify for Pension Credit
Be eligible for free bus travel - which is 60-years-old for everyone in Scotland
How to use the Pension Age tool
Choose whether you are looking to calculate your State Pension age or bus pass age - you can do one, then check the other.
Once the State Pension age option is selected, input your date of birth.
Next, select whether you're a man or woman.
The final screen reveals the exact date that you will reach State Pension age.
It’s also possible from this screen to get information on when you could become eligible for Pension Credit, get a pension forecast or receive other State Pension information.
Check your State Pension age on the GOV.UK website here.