Just when you thought it couldn’t get any higher, a new report released for the government has revealed that state pension age could rise again, leaving many people without a pension until the age of 70, meaning we will have to remain in work for longer than ever in order to qualify. The new rules are likely to affect those in work at the moment, under the age of 30. A second report, also released to the Government has stated that those under the age of 45 may also have to work a little extra. Those expecting to receive their state pension at the age of 67 will now have to wait an extra year until they are 68. Both reports are a little up in the air at the moment and it is thought that it will be properly decided later on in May when the government is due to make a decision.
It seems there are a number of factors that are contributing to the rise in cost of state pensions and it is something that ministers are now being forced to address seriously. Pension costs are rising due to things such as longer life expectancy, and the growing ratio of pensioners to people in work. The rise in cost may leave ministers with no choice but to push back the state pension age so that pensions remain affordable to fund. It is thought that at least six million people will be faced with the prospect of having to work longer. The news will be most distressing to those in their early forties who have perhaps planned ahead for retirement, only to find they will need to add another year onto this. Those that are 30 or younger will have the expectation of retiring at seventy reinforced, an extra two years later than the current age. It is thought that the state pension age could rise as soon as 2054 (although this is an extreme scenario). The current rise is the state pension age rising to 68 for those born after 1978. This rise is due to be put into effect by 2046 but could be brought forward to 2039, which will, of course, affect a wider range of people.
The Current Figures
State Pension Age, much to the annoyance of workers, has experienced significant raises in the past couple of years and it looks like it isn’t going to stop anytime soon. Between 2018 and 2020 the state pension age (currently 65) is set to rise to 66, closely followed by 67 between 2026 and 2028 and then to 68 by 2046. According to ministers, the reason for the gradual raises is to smooth out the process as well as trying to make the future both fair and sustainable for the younger generation. Whilst this may seem maintainable, the calls for the 2046 date to be pulled forward are getting harder and harder to ignore as state pensions become increasingly expensive (as mentioned above). New calls have called for the state pension age to rise over a two-year period – beginning in 2037 and ending in 2039.
At the moment, the State Pension Age is under ‘triple lock’ but there are fears that this protection could soon come to an end. The triple lock protects pension payments for rising in line with whatever the national average wage is at the time as well as inflation and 2.5%.