The state pension age is set to rise seven years earlier than expected. The bombshell move, which will save the Treasury an estimated £6 billion a year from 2037, will force millions of Brits to work until they are 68.
The state pension age is due to rise gradually to 68 between April 2044 and April 2046, affecting those born between April 1977 and April 1978. However, the Treasury has now told the Office for Budget Responsibility (OBR) that they plan to bring the increase in the retirement age forward by at least seven years. This would mean around five million people, who are currently aged between 49 and 55, would have to work an extra year before being eligible for their state pension.
As reported by The Times, the move comes after a review led by the Government Actuary’s Department and Suzy Morrissey, the deputy director of the Pensions Policy Institute. However, ministers insisted that no final decision has been made on when the pension age will rise.
The OBR said: “We assume that the state pension rises to 68 in 2037-39. The Treasury has confirmed to us that this is the government’s current policy position, rather than the legislated increase set in the Pensions Act 2007.”
Torsten Bell, the pensions minister, confirmed that bringing forward the rise in age was under consideration. He said the Labour government wants to “make sure that we have a sustainable state pension for the longer term.”
Meanwhile, Sir Steve Webb, the former pensions minister, said he expected the changes after the pension review. Mr Webb, who is now a partner at the consultancy firm Lane Clark & Peacock, said: Anyone checking the government’s pension calculator would assume that the pension age won’t be rising to 68 before the mid-2040s.
“But within government it is widely expected that the age increase will take place seven years earlier than the law currently says.
“That means around five million people will lose around £12,500 that they might otherwise have been entitled to. Ministers are going to have to be clear about this soon. If they want to increase the pension age in 2037 they are to have to legislate on this next year.”
A Treasury spokesman said: “The previous Government publicly committed to raising the state pension age to 68 between 2037 and 2039 and the OBR has reflected that position for years.
“The state pension age review, which will consider what the timetable for state pension age should be in the coming decades, is currently under way and we cannot pre-empt the outcome.”
