More uncertainty as government stalls response to state pension age increase
An independent review of the state pension age published in March recommended that this age rise to 68 over a two-year period starting in 2037. This meant that people currently in their 30s and 40s could work until the age of 70.
The review author, John Cridland, former head of the Confederation of British Industry (CBI), said he needed to strike a balance between the challenges of a growing and ageing population with a fair and sustainable state pension age.
Cridland also suggested the triple lock guarantee on pensions, which allows pensions to rise annually by the higher of inflation, earnings growth or 2.5%, be scrapped.
The government committed to publish a response to the recommendations by 7 May 2017, but following the prime minister’s call for a snap general election to be held in June the process has been stalled owing to strict rules around what the government can and can’t say and do in this pre-election period.
Tom McPhail, head of policy at Hargreaves Lansdown, said: “There are no votes to be won in telling people they have to work longer, so it is hardly surprising the government has chosen to kick the can down the road until after the general election.
“Nevertheless, whoever forms the next government, this challenge will have to be addressed and sooner rather than later. Under some models explored by John Cridland and the Government Actuary, state pension ages could be rising to 70 for some in their 30s today, so people need to know what to expect.
“It may well make sense for the next government to bundle together the review of the state pension age, with any decisions regarding the inflation-proofing for the pension.”
Steven Cameron, pensions director at Aegon, said alongside Brexit, state pensions will be firmly on the general election battleground.
“Decisions on future increases in state pension age will affect people for decades to come and it’s right for the government not to rush out a pre-election commitment.
“However, voters deserve to know what plans each political party has for the state pension, both the age from which it comes into payment and also how increases will be determined. State pensions face an ongoing challenge from demographic changes and increases in life expectancy and as funded by the working population, need to be affordable long-term. Party political manifestos should be bold and set out their state pension stall in detail.”