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State pension age to increase seven years earlier than planned

Britons born between 1970 and 1978 will have to wait an extra year, until they are 68, to claim their state pension, the government has announced.

David Gauke, the work and pensions secretary, announced the controversial rise for about 7 million people in their late 30s and early 40s just before the House of Commons breaks up for its summer recess.

The move implements the findings of a review by the former CBI director general John Cridland, published in March, which recommended accelerating the planned increase in the pension age to prevent the costs of the state pension becoming unsustainable.

 

The decision means the state pension age increasing from 67 to 68 between 2037 and 2039 – seven years earlier than previously planned – to reflect increasing longevity.

Gauke said implementing the proposals would create “fairness across the generations, and the certainty which people need to plan for old age”, and insisted he wanted Britain to be “the best country in the world to grow old”.

He said failing to act “would be irresponsible and place an extremely unfair burden on younger generations”.

However, Labour and charities were quick to condemn the plans, with the shadow work and pensions secretary, Debbie Abrahams, describing them as “anything but fair”, and arguing that many pensioners faced a “toxic cocktail” of ill-health long before they reached 68.

Labour said in its manifesto it would not implement the Cridland proposals, and would instead consult on varying retirement ages.

A number of MPs also expressed disappointment that Gauke had chosen to raise the pensions age rather than take the opportunity to reverse the government’s policy for so-called Waspi women – those born in the 1950s who have seen their pension age rise faster than expected.

Age UK was even more critical of the plans, saying the government was “picking the pockets of everyone in their late 40s and younger, despite there being no objective case in Age UK’s view to support it at this point in time”.

The charity for older people also pointed out that the announcement came just days after Sir Michael Marmot, a former government adviser, warned that the trend towards longer lives was “pretty close to having ground to a halt” since 2010 after rising constantly since the second world war.

Caroline Abrahams, charity director at Age UK, said it was “astonishing that this is being announced the day after new authoritative research suggested that the long-term improvement in life expectancy is stalling”.

“For people in midlife and younger their state pension may seem a lifetime away but the fact is that the change announced today will have a real impact on them later in life.”

Graham Vidler, the director of external affairs at the Pensions and Lifetime Savings Association, a group representing pensions schemes, raised concerns about whether those affected will be properly prepared.

“This proposal will affect more than 7 million people in their late 30s and 40s – the sandwich generation,” he said. “This group are also those most at risk of inadequate private saving – they have not had the same access to final salary pension schemes as their parents and are too old to enjoy the full benefits of automatic enrolment that their children will see.

“We call on the government to follow up on one of Cridland’s other recommendations and provide access to ‘midlife financial MOTs’. This will help those people who need to work longer before they receive their state pension to make smarter financial choices to boost their savings.”

The government committed in 2013 to continue increasing the state pension age in line with life expectancy, to prevent the costs swallowing up a growing share of public spending.

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Gauke said the government was “aiming at the proportion of life spent in receipt of state pension to be 32%”. And he added that the government would be carrying out a further review before legislating to implement the plans.

The DUP indicated it supported May’s position. Sammy Wilson, the MP for East Antrim, said it was an “an inevitable consequence of increased life expectancy and improvements in the general health of the population”.

“As the cost of pensions increase and the real value of the pension improves it is right that the government engages in long term thinking about future pension arrangements,” he said. “It is only proper that plenty of notice be given so that those affected can make any additional provision which they wish to make and also know with certainty the age when they can expect to retire from work.”

The government was meant to respond to the Cridland review by May but its decision was delayed because of the election.

The SNP suggested May had held back from announcing the rise in the pensions age for some people until after the election, branding it “Tory trickery at its worst”.

“It’s clear why the UK government held back until after the election and did not publish this on the legal date it was supposed to on 7 May, as this would have undoubtedly lost the Tory party even more seats than they did,” said Kirsty Blackman, the SNP’s economy spokeswoman.
“It is utterly shameful that the Tory government could sneak an announcement that will hit people across the UK during the last week of parliament before recess. It is yet another chapter in the Tory government’s hit on people already struggling due to this government’s austerity-driven agenda.”

Frances O’Grady, general secretary of the Trade Unions Congress, said raising the state pension age “risks creating second-class citizens”.

“In large parts of the country, the state pension age will be higher than healthy life expectancy,” she said. “And low-paid workers at risk of insecurity in their working lives will now face greater insecurity.”

 

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