Book Description
This paper outlines the Government's new plans for the timing of the increase in state pension age to 66. The Pensions Act 2007 legislated for the state pension age to increase for both men and women to 66 by 2026, to 67 by 2036, and to 68 by 2046. But subsequent gains in average life expectancy have outpaced the projections on which that timetable was based. Official projections for life expectancy for those reaching 65 in 2026 have increased by 1.5 years for men and 1.6 years for women. The cost implications for maintaining the state pension are serious. The increased life expectancy means that, just for those reaching state pension age this year, the costs would increase by £6.5 billion over the lifetime of that cohort. Women's state pension age is currently rising from 60 to be equalised with men's at 65 by 2020. To enable an increase to 66, this timetable will be adjusted so that equalisation is reached in November 2018. The increase to 66 will then occur between December 2018 and April 2020 for both men and women. The increase will be phased in at a rate of three months' increase in state pension age every four months. This means that 4.9 million people will have their state pension age revised, of which 4.4 million will have an increase of a year or less. It will result in £30.4 billion of savings between 2016/17 and 2025/26, which would otherwise have to be met by the working-age population.
