24 January 2023
If you are covering the reports first published in The Sun that the State Pension age will increase to 68 in the next decade, please see comment from Jon Greer, head of retirement policy at Quilter:
“Proposed state pension age increases are always a bitter pill for the electorate to swallow as people see their working lives stretch further in front of them. However, the government did signal in its 2017 review that it would follow a recommendation to accelerate the increase to 68 into the 2030s, so these rumours are arguably not a change in stance.
“Updated life expectancy statistics will be key to the government arguing that any change they propose is justified to protect the sustainability of the state pension. The old age dependency ratio stands at around 3.5 working age people for each person above State Pension Age, and is projected to increase in the next 40 years. To maintain the current state pension age the government would have to consider increasing taxation or reduce the amount of the state pension, neither of which are palatable.
“Meanwhile average life-expectancy has stalled. However, there are material discrepancies in life expectancy, particularly in terms of the regions in which people live, which means some of the population will not benefit as much as others despite paying similar national insurance during their working lives.
“However, taking these disparities into account and producing a differing state pension age based on where people live would be incredibly complex to implement, and it may still not reach those who are disadvantaged in the way it would be intended. Adjusting the state pension age based on the life expectancy of individual regions would be done with the intention of helping those who need it most, but it would be better that those in need received tailored support based on their personal circumstances via the benefits framework that a region-based state pension age would not be capable of doing so.
“Ultimately, people need to take responsibility for their own retirement and plan ahead, and taking professional advice or financial guidance earlier in life is a sensible step. A professional adviser can help project your income needs in retirement and explain how much you’d need to set aside now in order to be able to retire earlier than state pension age.”
