Uncertainty around life expectancy and public finances has led to a delay in plans to raise the age when older people can access their state pension.
Increasing the UK state pension age has been on the cards because of the trend of people living longer, said Sky News, but the coronavirus pandemic changed that, “reducing the life expectancy for women by one year and 1.3 years for men”.
The decision to delay the changes could also have been influenced by France, the news website said. There, violent protests have erupted at President Emmanuel Macron’s proposals to raise the state pension age from 62 to 64.
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The Tories look determined to try to claw back some support among their core voters by delaying the widely anticipated state pension age increase, Jon Greer, head of retirement policy at Quilter, told MoneyWeek. “Any increase would have proven incredibly unpopular and we may see more of these crowd pleasing policies as we head towards the general election.”
What is the state pension?
The state pension is a universal benefit paid to people across the UK once they reach pensionable age.
Everyone gets it, said The Money Edit, irrespective of your financial position. “However, the actual amount that you get can vary based on a range of factors, such as when you were born and your National Insurance record.”
Once you reach state pension age you usually need at least ten years of National Insurance contributions to receive a minimum level of the support and 35 years to get the maximum.
You can check your National Insurance record on the government website to see how many years of contributions you currently have.
When will you get the state pension?
More than 12 million people currently receive the state pension, said the BBC.
The state pension age is currently 66 for men and women born between 6 October 1954 and 5 April 1960.
It was due to go up to 67 by 2028 and 68 by 2046, said MoneyWeek, and there were reports that an increase to 68 would be brought forward to “as soon as 2035”.
By law the government is required to examine planned changes to the system every six years but Work and Pensions Secretary Mel Stride said in March that another review will take place in two years – “meaning a decision will not be made until after the next election”.
Stride told MPs: “Given the level of uncertainty about the data on life expectancy, labour markets and the public finances, and the significance of these decisions on the lives of millions of people, I am mindful a different decision might be appropriate once these factors are clearer.”
That means that currently, those born after 5 April 1960 are due to see a gradual rise in the state pension age to 67 and people born on or after 5 April 1977 are due to see a rise to 68 between 2044 and 2046.
People now in their 40s may face a longer wait, though, and could have to work until they are 69 or even 70 if the government is to stay within spending guidelines, said the i news site
It comes after an independent review by Baroness Neville-Rolfe recommended capping state spending on pensions at 6% of gross domestic product (GDP). If implemented, said the newspaper, this would raise the pension age from 68 to 69 between 2046 and 2048. “Anyone born after 1979 would have a pension age of at least 69 under the review.”
How much is the state pension worth?
The state pension increases each year, courtesy of the triple lock, said The Money Edit. This ensures that the state pension rises by whichever is highest out of the rate of inflation, wage growth or 2.5%.
The full new state pension is worth £203.85 per week from 6 April 2023, “the biggest-ever increase”, said MoneyWeek.
But you should not rely solely on your state pension for retirement, added the financial website, “as it likely won’t be enough to cover a comfortable retirement”.
“The elephant in the room is whether future governments will be able to maintain the benefits afforded to pensioners today – or some semblance of them at the very least,” Myron Jobson, a personal finance analyst for interactive investor, told MoneyWeek.
We are likely to spend a third of our adult life in retirement, he said, so people should “at least get an idea of how much money you’d need for a comfortable retirement”.
He added that “even a small regular contribution makes a big difference to your retirement and the magic of compound interest is likely the most significant benefit of investing early”.
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