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Over the years, we have seen several changes to the state pension age, affecting those approaching retirement as well as younger people.
While the changes have been implemented to ensure the sustainability of the state pension system, with many living longer, and the population ageing, one in three people (and half of under 50s) think that there probably won’t be a state pension by the time they retire. In this article, we will explore the reasons behind the state pension age review and what they mean for all.
The first change to the state pension age was made in 2010, when the government began to gradually increase the state pension age for women from 60 to 65, to bring it in line with the state pension age for men.
More recently, further revision to the state pension age was introduced in the Pensions Act 2014. This means that anyone (man or women) born after 6 April 1960 will have a state pension age of 67, with the changes being phased in between 2026 and 2028.
Since then, independent reviews have made different recommendations to accelerate the increase of state pension age to 68 as early as the 2030s. As of March 2023, the government announced this won’t happen yet but this may change in the next review due two years after the upcoming election.
While reasons behind the changes to the state pension age are many, the primary concern is the UK's ageing population. As people are living longer and need to rely on their pension for a greater period of time, the cost of providing state pensions is increasing.
Additionally, due to slower population growth, the ratio of workers to pensioners is decreasing, meaning that there are fewer people paying into the system to support those who are retired.
Increasing the state pension age would mean that people who plan to rely on the state pension need to reconsider their retirement plans, calculate what the change means for them and potentially work for longer. However, for those with poor health or on low incomes, there is no simple route as working for longer may not be possible.
The recent state pension age increases have been met with mixed reactions. In the dilemma between coverage and fiscal sustainability, some feel that they have been unfairly impacted, particularly those who were close to retirement when the changes were announced. Many also argue that a state pension age review will disproportionately affect the UK public that struggle with finances or declining health.
It's critical to have open discussions, engaging decisions makers and the general public about the state pension age review to help people live better, longer lives. The state pension should be sustainable and effective for all – read more about the public attitudes to the state pension to understand our recommendations for actions we can take now.
