30 March 2023
If you are covering the news that the government will announce today that it will not bring forward the date the state pension age will rise, please see the following comment from Jon Greer, head of retirement policy at Quilter:
"The Tories understandably look determined to try and claw back some public favour amongst its core voters by delaying its widely anticipated state pension age increase. Any increase would have proven incredibly unpopular and we may see more of these crowd pleasing policies as we head towards the general election.
"The plan to delay has been reportedly due to average lower life expectancy. However, it is forecast that the number of people over State Pension age will grow significantly over the next 20 years whilst the proportion of the working age population to support them will start to fall.
"The delay to increasing the age therefore does put the state pension’s long term sustainability into the spotlight and this could be the government simply kicking an inevitability down the road for the next party to take government to deal with. Overall the Government aspire to aim for ‘up to 32%’ in the long run as the right proportion of adult life to spend in receipt of the State Pension. As a compromise if they choose not to raise the age then it does not leave the Government with many levers it can pull.
"The IFS suggest that a one-year increase in the state pension age in the late 2030s would likely save around £8-9 billion a year in today’s terms. However, delaying the planned rise in the state pension age to 68 by seven years would cost at least £50 billion.
"It may leave the Government with the choice of reviewing the triple lock and replacing it with a less generous uprating mechanism and/or accepting that funding for state pensions is going to increase through higher taxes (or national insurance). But it’s a question of what the general public would dislike least because we face difficult decisions.
"For those worried that this delay is a short-term solution it should be known that the framework for reviewing the State Pension age sets out that there should be a minimum of 10 years’ notice for individuals affected by changes so that they can adequately plan. There should therefore be no immediate concern for anyone. However, upping contributions to a pension can help make sure that if you do end up having to wait longer to access you state pension then you have enough private pension wealth to bridge the gap. Alternatively, you may want to save into different savings vehicles like ISAs so that you can draw on that before you reach an age when you can get access to the state pension. The most important piece of advice is to take ownership and make a plan; don’t leave it too late."
