Twenty million people should get their state pension early if government sticks to plan


The state pension age is scheduled to move from 66 to 67 by 2028 – in the next Parliament – but consultants LCP say there is no case for increasing it until 2051

Grandfather and Grandchild reading the paper

Millions of workers should be heading for an earlier retirement if the government sticks to its life expectancy calculation, analysis has found.

The state pension age is scheduled to rise from 66 to 67 by 2028 – in the next Parliament – but consultants LCP said there is no case for increasing it until 2051.

This is because life expectancy improvements have largely failed to materialise.

Underpinning the state pension age is a set of calculations which are designed to make sure that we spend no more than one third of our adult life in retirement.

The idea is that if we all keep living longer, then state pension ages would be linked to rising life expectancy. That, in theory, means the retirement age shouldn’t rise.

The state pension age is being reviewed again
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Image:

Getty)

However, life expectancy has not risen. To give one example, when the last state pension age review was undertaken they thought that a 66 year-old woman alive today would live to 89. More recent figures say she will only live to 87.

Delaying the increase by 23 years would give a reprieve to more than 20million people born between 1961 and 1984, who would be able to retire at 66 rather than 67.

However, it would also deprive the Treasury of £195billion in planned savings.

Former pensions minister Sir Steve Webb, now a partner at LCP, said: “The Government’s plans for rapid increases in state pension age have been blown out of the water by this new analysis.

“Even before the pandemic hit, the improvements in life expectancy which we had seen over the last century had almost ground to a halt. But the schedule for state pension age increases has not caught up with this new world. This analysis shows that current plans to increase the state pension age to 67 by 2028 need to be revisited as a matter of urgency.

“Pension ages for men and women reached 66 only last year, and there is no case for another increase so soon.”

The warning comes days after the Department for Work and Pensions announced its second review of the state pension age will assess whether the retirement age remains appropriate. It is due to be published in May 2023.

In 2013 the Government stated the state pension age should be linked to life expectancy, with people spending no more than a third of their adult life in retirement.

Under this formula, the state pension age should move to 68 between 2039 and 2041. In 2017, the DWP indicated it planned the 67 to 68 rise between 2037 and 2039.

Using the most recent population estimates from the Office for National Statistics (ONS), a 66-year-old woman’s life expectancy has reduced by two years to 87. LCP believes the increase to 68 will not be needed until the mid-2060s.

The state pension age has become a highly contentious issue after women born in the 50s said they were not given enough notice that it would move from 60 to 65.

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www.mirror.co.uk

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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