This article is just an example of the content available to mallowstreet members.
On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.
All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.
The government will not accelerate the rise in state pension age to 68, according to recent newspaper reports.
A review of the state pension age by a Conservative peer is underway, and reports in the Sun from January said the government could bring state pension age up to 68 as early as the mid-2030s.
However, the Financial Times reported on Tuesday that ministers have now delayed plans to raise the state pension age after warnings from Tory MPs that the move could cause a backlash from affected voters.
A general election is due by January 2025, and any move to accelerate state pension age rises would have given ammunition to the Labour party as the chancellor has also recently abolished the lifetime allowance. Removing it benefits only the highest earners, while the lowest earners rely most heavily on the state pension.
They also live less long on average, with life expectancy now thought to go up much more slowly than previously anticipated. Life expectancy is regionally different, and lower in areas where the Conservative party made gains in 2019 such as former 'red wall' constituencies.
State pension age is 66 for both men and women at present and due to rise to 67 between 2026 and 2028. A rise to 68 is only written into law for 2044-46, but following the Cridland review in 2017, the government announced plans to bring the timetable forward so SPA would be 68 between 2037 and 2039.
A DWP spokesperson said: “The government is required by law to regularly review the State Pension age and the next review will be published by 7th May.”
People will 'breathe a sigh of relief’
The reports about abandoning the acceleration of SPA rises were welcomed by the industry.
Increases in the state pension age fall disproportionately on people with lower incomes who generally have poorer longevity, said Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association.
“If it’s true that the government has decided to not bring forward the date at which the state pension age will rise to 68, it is a very positive step for future pensioners because the state pension makes up the majority of retirement income for most people,” he said.
When rumours of a planned increase were first reported in January it prompted thousands of people to go online, with 110,000 searches for ‘retirement age’ recorded, an 82% increase on the same period last year, according to provider Standard Life.
Dean Butler, managing director for customer at Standard Life, said the news will be met with a sigh of relief from those who would have been affected.
“Those currently in their early fifties were the first that could have been impacted by the changes, and these would have been particularly challenging for a number of groups,” he said. “Those planning to start accessing their personal savings before for state pension age would have had to consider whether they would have stretched far enough to bridge the gap, while others would have faced an extended period in the workforce.”
Steven Cameron, pensions director at provider Aegon, agreed the reported shelving of accelerated SPA increases will be a big relief to many.
“Having certainty and stability around when your state pension will commence is essential for future planning, and official confirmation from the government would be most welcome,” he said.
The triple lock on state pensions means they rise by the highest of earnings, inflation or 2.5%. With inflation being high, it will go up by 10.1% in April. The boost “comes at a high cost which is met from the National Insurance contributions of today’s workers”, Cameron pointed out.
It was thought that to sustain funding the triple lock, the state pension age would be increased sooner.
“However, life expectancy at retirement is now lower than previously assumed, which takes some pressure off the future cost of state pensions and avoids a controversial state pension age hike in the run-up to a general election,” he said.
