Millions of individuals in the UK may face a longer wait for their state pensions, as the government's Treasury has informed the Office for Budget Responsibility (OBR) that the pension age is set to increase to 68 between 2037 and 2039. This projected acceleration is seven years earlier than the timetable currently outlined in legislation, which sets the rise for 2044-2046.
The shift could mean approximately five million people, currently aged between 49 and 55, will need to work an additional year before receiving pension payments. This change is estimated to cost individuals around £12,500 each, while potentially saving the government £6 billion annually.
The move comes despite criticism from Labour ministers regarding previous pension age increases enacted by the Coalition administration. Pensions minister Torsten Bell has sought to downplay the significance of this accelerated timeline, emphasizing that a review is ongoing and that the Treasury was reflecting the policy position of the preceding Conservative government.
The potential change was noted in the OBR's fiscal risks report, which stated that the Treasury confirmed the 2037-2039 timeline as the government's current policy, distinct from the legislated increase in the Pensions Act 2007. The state pension age is already scheduled to reach 67 between April of this year and 2028.
A government review published in March of the previous year indicated that the state pension age could rise to 71 by the late 2050s if life expectancy returned to the trajectory observed in 2014. The OBR has also highlighted the increasing cost of the state pension in the coming decades.
Bell stated on X (formerly Twitter) that current legislation sets the state pension age to rise to 68 in the 2040s and that the previous Conservative government had expressed a desire to advance this to the late 2030s. He clarified that the reports refer to the previous government's stance, not any new policy announced by the current administration, and that no change in policy has been announced. He also noted that a review of the state pension age is a statutory requirement under the 2014 Act.
Bell also remarked in March to the Work and Pensions Committee that he believed ministers had been too complacent about the effects of past state pension age increases. He acknowledged concerns raised about slower increases in life expectancy for lower-income households, stating that consideration would be given to the needs of those not benefiting from broader longevity improvements. He added that while there is a general consensus for pension age adjustments with increased longevity, past accelerations were not always sufficiently weighed against their distributional consequences.