Millions of people in their late 30s and early 40s look set to have to work for an extra year after an official review recommended pushing up the state pension age (SPA) more quickly than previously planned.
The independent report said the SPA should rise to 68 by 2039 instead of 2046. It also recommended that the state pension “triple lock” is withdrawn in the next parliament.
Meanwhile, commentators said that a separate report from the Government Actuary’s Department, also out today, pointed to a possible SPA of 70 for anyone currently aged 30 or under.
Ministers said the findings would help the government make their decision during the coming months on what will happen to the SPA.
SPA is the earliest age that someone can start receiving their state pension, and is due to rise to 66 between 2018 and 2020, to 67 between 2026 and 2028, and then to 68 between 2044 and 2046.
John Cridland, former director-general of the Confederation of British Industry and the author of the independent report, said the aim was to “smooth the transition for tomorrow’s pensioners, and to try and make the future both fair and sustainable”. He called for the SPA to rise to 68 over a two-year period starting in 2037 and ending in 2039.
Cridland’s report said an increase to 68 had already been legislated for in the Pensions Act 2007, but since then life expectancy projections had changed. It added: “Forward projections for the public finances suggest that they are, and will continue to be, under pressure. On the balance of likelihood, the 2046 date will need to be pulled somewhat forward … We believe there is merit in giving future pensioners as much forward notice of this change as is possible.”
Tom McPhail, head of retirement policy at investment firm Hargreaves Lansdown, said: “This report is going to be particularly unwelcome for anyone in their early 40s, as they are now likely to see their state pension age pushed back another year. For those in their 30s and younger it reinforces the expectation of a state pension from age 70, which means an extra two years of work.”
Fears had already been expressed that the government could water down or ditch the state pension “triple lock”, which means that the payments rise in line with whichever is the highest of average wages, inflation, or 2.5%.
guardian.co.uk © Guardian News & Media Limited 2010