The government is pushing ahead with proposals to bring the pension age rise to 68 forward from 2044 to 2037. Around five million people aged 49 to 55 could have to work an extra year before getting their state pension.
The Office for Budget Responsibility says the current policy assumption is a move to 2037, while the Pensions Act 2007 timetable still points to 2044 to 2046. Torsten Bell said the government had not made a final decision on the change.
Office for Budget Responsibility outlook
The Office for Budget Responsibility says it assumes the state pension age will rise to 68 in 2037-39 and then to 69 in the 2070s. Under that assumption, the planned rise would come years earlier than the present timetable set out in the Pensions Act 2007.
The numbers also give the personal cost a clearer shape. At the current yearly rate, the extra year would amount to £12,500 for those affected, while the Office for Budget Responsibility says delaying the rise to the legislated timetable would cost an average additional £6 billion in today’s terms in each delayed year.
Torsten Bell on the decision
Torsten Bell told the Work and Pensions Committee in March that the government had not made a final decision. He also said, 'We want to make sure that we have a sustainable state pension for the longer term, because one of the most worrying things, if you look at the data at the moment, is the reduction in trust in the pension system.'
Bell added, 'Fairness is a very central part of why the state pension exists, and the design features of the state pension show that that is also something of cross-party consensus.' The remarks leave the timetable moving toward 2037, but the legislation still has to be started by next year at the latest to satisfy the 10 years’ notice rule.
Labour review and 2017 plan
A new review of the state pension age was launched by Labour last year and is being led by Dr Suzy Morrissey and the Government Actuary’s Department. The recommendation for a rise to 68 from 2037 dates back to the first review, released in 2017 and triggered by Theresa May.
That leaves the government with a narrow legislative path if it wants to reach 2037 on schedule. For workers now aged 49 to 55, the immediate question is whether the change will be written into law soon enough to keep the shorter timetable in place.
