State pension age increase could be slowed

Pension: Claer Barrett shares tips to maximise your state pension

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The next increase is set to take place in stages between 2026 and 2028, when the state pension age will increase to 67. Ministers are also set to increase the pension age again between 2044 and 2046, to 68.

A review is due to be published by May this year, which will provide more details about the future of the policy.

Analysts have previously warned the Government may increase the state pension age further in coming years, with Britons having to wait until their 70s to claim their hard-earned pension.

But Becky O’Connor, director of Public Affairs at PensionBee, said there may be a case for the gradual increase slowing down.

She told “More recent life expectancy figures suggest that life expectancy has stalled and even retreated in some parts of the country.

“Because of this, there are new arguments that planned rises to the state pension age should actually be slowed.”

However, she said the projections for the state pension age to increase are likely to prove to be accurate.

The analyst said: “It is likely that the state pension entitlement age will increase further because in general, people are expected to live longer.

“The state pension is the Government’s most costly benefit by far and it needs to keep a lid on how expensive it is to deliver, especially given a renewed commitment to increase it via the triple lock guarantee, so it periodically reviews the entitlement age.”

State pension payments are to increase by 10.1 percent in April with the return of the triple lock policy.

This means the full new state pension, which is currently £185.15 a week, will increase to £203.85.

Those on the full basic state pension will see their payments go up from £141.85 a week to £156.20.

The triple lock guarantees payments go up each year in line with the highest of 2.5 percent, the rise in average earnings and the rate of inflation.

The average earnings element was suspended last year after a distorted increase in earnings after the COVID-19 restrictions eased.

Ms O’Connor explained how life expectancy projections affect the state pension age policy. She said: “As a guide, the Government tries to keep the period of adult life spent in retirement at roughly 32 to 33 percent.

“The state pension age is currently set to rise to 68 between 2044 and 2046, but this would see the proportion of adult life spent in retirement rising to 33.5 percent, using projections for life expectancy from 2016.”

Some analysts have previously warned the age increase could be accelerated rather than slowed down.

Mark Devlin, senior technical manager at M&G Wealth, told about the “numeric case” for accelerating the state pension age increase.

He said: “Whilst I don’t know what this [the state pension age review] will contain there is certainly a numeric case for this to be brought forward.

“The state pension is not paid from any fund, it’s a pay as you go payment from revenue received by the Government.

“The state pension pays out over £100billion a year and with a CPI increase of 10.1 percent on its way this is a substantial cost.

“Couple this with an ageing population and you can see why this is an expense that the Government may well look towards making savings on.”

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