Millions of people could be forced to work longer under plans to bring forward the increase in retirement age by at least seven years.
In its latest spending report, the Office for Budget Responsibility said it assumes the State Pension age will rise to 68 between 2037 and 2039.
While the planned rise is not yet in legislation, the OBR said the Government’s stated policy is that the rise to 68 will happen in 2037-39, rather than 2044-45, in a move that would save the Government £6 billion a year.
It is estimated that bringing forward the increase would affect around five million people currently aged between 49 and 55.
However, any change to the State Pension age requires at least 10 years’ notice, meaning a planned rise in 2037 must start to be legislated on by next year.
Adam Cole, retirement specialist at Quilter, said: “Reports that the State Pension age might rise to 68 sooner than currently legislated will be unwelcome news for many workers approaching retirement. However, it is also a stark reminder of a reality that policymakers have been grappling with for years, which is as we live longer and the population ages, the cost of providing a state pension becomes increasingly difficult to sustain.
“The State Pension remains the bedrock of retirement income for millions of people, but there is a growing mismatch between the number of people drawing it and the number of working-age taxpayers funding it. In that context, future increases to the State Pension age are not especially surprising. Indeed, if governments wish to maintain the generosity of the State Pension, particularly under the triple lock, raising the State Pension age becomes one of the few levers available to control costs.”
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said: “The State Pension remains a critical element of retirement incomes in the UK for millions of people, and the reports that state pension age increases could be accelerated are a reflection of the difficult balancing act the Government faces in keeping the system affordable while people live longer, and ensuring it remains fair and adequate for those who rely on it.
“The challenging reality is that our research shows the pressures are already being felt most acutely by those least able to adapt to the current increase. Over a quarter of those directly affected by rises in state pension age say they are struggling to make ends meet day-to-day – compared to just one in seven of those above state pension age – and more than a third of people in their early 60s say they expect they will need to work for longer as a result.”
Foot added: “An official review of the State Pension age is underway so we should not take these reports as the outcome but the discussion about how we balance fairness and affordability of the State Pension is one we can expect to hear much more on in the coming months.”
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