State pension age could rise to 68 sooner than expected
The Government is reportedly looking at bringing forward the proposed increase in the state pension age to 68 in the next decade, instead of by 2046.
Prime Minister Rishi Sunak and Chancellor Jeremy Hunt are reportedly looking at moving the date forward as the Government grapples with an aging population and falling birth rates.
According to the report in The Sun, the Chancellor could announce the move as early as the March Budget.
Under current plans, the state pension age is set to rise from 66 to 67 by 2028, before rising to 68 between 2044 and 2046.
As such, the reported move could hit millions of people born in the 1970s, meaning they could need to work longer than expected to get the state pension.
The full flat-rate (new) state pension is currently £185.15 per week but will increase 10.1% in April to £203.85 a week.
The report comes after pension experts voiced their concern over recent statistics highlighting the fall in the birth rate in England and Wales, coupled with analysis revealing state pension outgoings will exceed tax receipts from 2024.
Tom Selby, head of retirement policy at AJ Bell, said bringing forward the planned increase “could be a huge money spinner, likely raising tens of billions in revenue” but means Sunak “will be playing with political fire”.
Selby said: “The big question is whether No.10 agrees this Exchequer boost is worth the inevitable pain at the ballot box.
“Even if the Treasury makes the argument that this shift is necessary to steady the nation’s finances and ensure the state pension remains sustainable over the long term, telling millions of people they will have to wait longer for their pension might prove the final nail in the coffin of the Conservatives’ hopes of winning the next general election.”
He added that for savers, this is another reminder that while the state pension provides a valuable foundation upon which to build your retirement plans, “both how much you receive and when you receive it remains at the whim of politicians”.
He added this is one of the reasons it is vital to build up a retirement pot, taking advantage of the retirement savings incentives on offer, any employer contributions available and tax-free investment growth.
Based on AJ Bell’s own analysis, considering the current timetable and its previous comment that it will give 10 years’ notice of any changes to the state pension age, this means the earliest it could be accelerated is 2033.
This means anyone born on or before 5 April 1966 would have a state pension age of 67, while anyone born from 6 April 1966 to 5 April 1967 would have a state pension age between 67 and 68. As such, anyone born from 6 April 1967 onwards would have a state pension age of 68.