UK Government Launches Review of State Pension Age Amid Calls to Safeguard Future Funding
The UK’s State Pension age is under the spotlight once again. With the official retirement age set to rise from 66 to 67 next year, the government is preparing for further increases. By 2046, the State Pension age could reach 68.
This shift is not sudden. Legislation introduced under the Pensions Act 2014 outlines a gradual increase. All men and women across the UK will reach 67 by 2028, with a subsequent rise to 68 planned for 2044–2046.
The government is legally obliged to review the State Pension age regularly. Previous reviews concluded in 2017 and 2023, while the third review began last month. Its focus is whether current pension rules match life expectancy and demographic realities.
Dr Suzy Morrissey has been commissioned by the Department for Work and Pensions (DWP) to prepare an independent report for the review. The report will offer recommendations to ensure the State Pension remains sustainable amid long-term demographic pressures.
Key factors under consideration include:
- Life expectancy
- Healthy life expectancy
- Population projections
- State Pension expenditure
- Labour force and employment trends
Dr Morrissey has invited public evidence on these issues via GOV.UK.
Forecasts highlight the urgency. The DWP predicts State Pension spending will reach £146 billion in 2025/26, up 63% over the past decade and 183% over 20 years. By 2029/30, this is expected to rise further to £169 billion.
Recent research by retirement specialist Just Group paints a clear picture of dependence on the State Pension.
- 94% of adults of State Pension age view it as an entitlement; only 4% see it as a benefit
- 58% of over-66s consider the pension affordable for the long-term, 18% disagree, and 24% are unsure
- Around 13% of over-66s rely on it for over 90% of household income, and 44% for more than half
- 64% support the Triple Lock for older generations, but only 16% believe it is fair to younger people
Stephen Lowe, communications director at Just Group, said: “As a result of rising longevity and dropping birth-rates, it is estimated that a quarter of the UK’s population will be aged 65 or older by 2050.
This means that the burden of funding the State Pension will fall on a shrinking proportion of working people.”
“If the Government wants to avoid increasing taxes or means-testing the State Pension then it may have to look at options either to increase the age at which people receive the State Pension or to moderate the amount paid.”
He added: “Neither of these are political vote winners – and as we have seen with the Winter Fuel Payment and disability payments, once a benefit is introduced it becomes extremely difficult to reduce or withdraw that support.
If the government does bring in changes to the State Pension – either to the amount or the age at which it is paid – then it makes sense for people who are not yet receiving it to build up some resilience against those changes.”
David Pye, client consulting director at Broadstone, emphasised the review’s importance: “The launch of the State Pension Age Review is a critical step in laying out the long-term future of this hugely important core benefit for retirees to aid their individual planning and cashflow modelling that many now undertake.”
“With an ageing population, previous governments have almost exclusively used an increasing State Pension age to control costs – especially at a time of creaking public finances.
But it will be interesting to see if the final Report recommends anything different, especially as life expectancy plateaus and our health landscape changes.”
The review could shape retirement planning for millions. If the State Pension age rises further or payments are reduced or means-tested, retirees may need to rely more heavily on personal savings.
The government urges participation in the consultation, signalling that changes to the State Pension could be on the horizon.
