29/03/17State Pension age recommended to hit 68 by 2039
An in-depth review of the State Pension age was commissioned by the Government last year, and the results have now been published.
The main recommendation would see the minimum age a State Pension can be received rise to 68 by 2039; seven years earlier than currently timetabled.
The year-long review was conducted by John Cridland, the former Director General of the Confederation of British Industry (CBI). Mr Cridland made a number of suggestions in his report, titled The Smooth Transition, including:
- State Pension age recommended to rise to 68 by 2039
- ‘Triple lock’ protection to be scrapped
- No early access for people in ill-health approaching their State Pension age
The current age in which a State Pension can be accessed is 63 for women and 65 for men. A schedule is in place to gradually increase both ages to 68 by 2046. Mr Cridland recommends bringing this forward by seven years, as it could cut pension costs by £100 billion per year.
An estimated 5.4 million people under 45 would be affected by this proposed change, which is predicated on the fact that we are living longer. John Cridland stated that his review considers the consequences of an ageing society. This is supported by life expectancy figures. The Office for National Statistics reported recently that there will be an estimated 56,000 people in the UK over the age of 100 by 2050. This is a dramatic rise on the current number, which stands just shy of 6,000.
The report ran alongside work by the Government Actuary’s Department (GAD), which was commissioned to provide further thoughts of when changes to the State Pension age should be made.
The GAD reported that the state Pension age could reach 70 as soon as 2054.
‘Triple lock’ protection to be scrapped
Mr Cridland also made recommendations about the future of the ‘triple lock’ protection system. The policy, put into place in 2010, guarantees the State Pension to increase by whichever is the highest out of:
- Average earnings
- Inflation as measured by the Consumer Price Index (CPI)
An income-based system would replace ‘triple lock’, meaning that the amount of minimum pension received could vary based on a person’s earnings.
No early access for ill
Mr Cridland explored the idea of allowing people in poor health, or who had longer working lives, to have early access to their State Pension. This was essentially rejected, but an additional means-tested support system was suggested as a potential solution, providing it was only available one year before the State Pension age.
The Smooth Transition takes into account the priorities the Department for Work and Pensions set out in 2014 including:
- Long term affordability
- Fairness to current and future generations of pensioners
- Consistency with supporting fuller working lives
It is not clear how many of the proposals will be accepted, but both Mr Cridland’s report and the GAD review, will be given equal weight when the Government discusses the State Pension in May.