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Financial security
Phoenix Insights Publication Author
Phoenix Insights
Longevity Think Tank
01 Apr 2023
Reports
Financial security

Understanding the implications of the state pension age (SPA) review

Phoenix Insights Publication Author
Phoenix Insights
Longevity Think Tank
01 Apr 2023
Reports

Understanding the implications of the state pension age (SPA) review

Two People Walking Coastal Path

Following the first independent review of the SPA by John Cridland in 2017, the government recently published the second independent review by Baroness Neville-Rolfe. Due to uncertainty in life expectancy data the government have decided not to accelerate the SPA increase at this stage. Instead there will be a further SPA review in the next parliament within two years.

Partnering with Frontier Economics, we’ve used our Longer Lives Index to explore the impact of the SPA increase should different options be implemented and have also identified policy changes needed to support those most impacted.

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Two People In Workshop

Our findings

  1. Over 3 million people would be affected if the increase to 68 were to occur between 2041 and 2043 as recently recommended by Baroness Neville-Rolfe; while nearly 7 million people would be affected if the increase was to occur between 2037 and 2039 (as recommended by the Cridland review).
  2. Those entitled to a full new state pension would lose over £10,600 in state pension income as a result of an increase in their SPA from 67 to 68. For many impacted by an accelerated increase in SPA, working longer and saving more (e.g. into their workplace pensions) will be the default option. However, whether they will choose to or be able to do so is questionable.
  3. 44% of defined contribution pension savers potentially affected by the Cridland recommendation are already not on track to be able to afford the retirement they expect. This group will need clear communications and actions to ensure they make informed choices to meet their target income.
  4. Around 14% of those potentially affected by the increase in the SPA are both not confident of being able to work until their planned retirement age and do not have significant sums of private wealth. People who are more reliant on the benefit system will receive less generous working-age benefits as compared to state pension levels. These groups may need additional targeted support to avoid further exacerbation of wealth and health inequality in later life.