A review of the state pension age was started; will it increase more quickly in the future?

After warning of a "retirement crisis" and reviving the Pensions Commission to increase pension savings, the government has announced a review of the state pension age

Concerned that people are not saving enough for their retirement, Labour has ordered a review of the state pension age.

The current state pension age for both men and women is 66. It is anticipated to increase to 67 in 2026 - 2027 and to 68 in 2044 - 2046.

Lawmakers are required to review the eligibility age for the state pension every six years. The review will take into account life expectancy and other factors to determine whether the current state pension age is still appropriate.

To address the "retirement crisis that risks tomorrow's pensioners being poorer than today's," the government has also brought back the Pensions Commission. It cautions that forty-five percent of working-age adults do not save any money for their pension.

Work and pensions secretary Liz Kendall says: "People should know that they will have a good retirement income with all the freedom, dignity, and security that comes with it. However, the reality is that many people do not live that way, particularly those who work for themselves or are low-paid.

"After 20 years, we are reviving the Pensions Commission to address the obstacles that prevent too many people from saving in the first place.

The State Pension Age Review is what?

With today's announcement, the third State Pension Age Review officially begins. The second was released by the Conservative government of Rishi Sunak in March 2023.

When determining the state pension age for upcoming decades, Labour has commissioned two independent reports as part of the State Pension Age Review.

The Government Actuaries Department will prepare a report on the percentage of adult life in retirement. The review will take into account the most recent life expectancy data, examine intergenerational equity, and compare countries. Dr. Suzy Morrissey will report on factors that the government should take into consideration relating to state pension age.

The Department for Work and Pensions states that it will also take into account the effects of past adjustments to the state pension age, the financial implications, and the effects on present taxpayers as well as those who may be or become dependent on the state pension as their main source of income ("as well as how we best support an ageing population and their opportunities to work").

It is anticipated that the report will evaluate the current legislative timings for the 2044 - 2046 increase to age 68.

The government is under no obligation to follow the review's recommendations.

Will the state pension age rise?

The state pension age change is a contentious topic.

When workers get older and must work longer hours before they are eligible to receive the state pension, they are frequently disappointed.

It is also a controversial one. The Women Against State Pension Inequality (Waspi) group has been advocating for years about how many women born in the 1950s were poorly informed about the state pension age increase, which left them with little time to make financial preparations.

The current plan to raise the state pension age to 67 and then 68 may be approved by the review. Alternatively, it might indicate that the increases are acceleratedor perhaps slowed down. Additionally, it might suggest raising the age further, to 69 or even 70.

The wealth manager Quilter's retirement specialist, Kirsty Anderson, says the review will be "politically sensitive."

"It may be necessary to accelerate the rise to 68 in order to preserve sustainability, but this needs to be supported by updated life expectancy data and a thorough comprehension of regional disparities," she says.

According to Damon Hopkins, head of DC workplace savings at the consulting firm Broadstone, the State Pension Age Review's introduction is a "necessary step," and he says he wouldn't be shocked to see the age increase accelerated.

"A change is unavoidable given the state pension's enormous financial cost and the aging population. Naturally, a reduced or later state pension would increase the need for reform in the private savings sector," he says.

The state pension triple lock, which guarantees the state pension is uprated annually by inflation, earnings or 2.5 percent (whichever is highest), is forecast to cost a massive 15.5 billion a year by 2030, according to the Office for Budget Responsibility.

The State Pension Age Review needs to "carefully consider the impact that raising the age further could have on millions of savers and how to help people engage with their pension options," according to Lily Megson-Harvey, policy director at My Pension Expert.

"Not everyone can just work for longer," she observes. Those who are already having difficulty saving enough money and frequently depend more on the state pension for retirement security may also be disproportionately affected.

Learn More about the Work and Pensions Department.