Ministers delayed plans to raise state pension age from 68 to 68 because of falling life expectancy and warnings by Tory MPs about the possibility of a backlash from middle aged voters.
After 2044, the state pension age will rise to 68. Officials say that the government had hoped to move this forward to 2037-2039. The plan was to be confirmed in May. However, officials now expect to push the decision past next year’s elections.
The issue of raising the state pension age is controversial. It has caused riots in the streetsof France. Tory MPs have urged for the delay, arguing ordinary voters would resent having work longer at a moment when Jeremy Hunt has relaxed tax rules regarding pensions for the rich.
Senior Tory MPs warned about the “critical juxtaposition” scrapping PS1mn’s lifetime allowance to pension savings and asking ordinary voters to work until age 68 in order to receive a state pension.
Insiders in government deny any connection, insisting that ministers needed more time for falling life expectancy data to be considered. This data had been distorted by the Covid pandemic and other information, such as data from 2021 census.
A government insider stated that they were “gung-ho” to increase the pension age. “But they got cold feet.”Harriett Baldwin (Tory MP and chaired of the Treasury committee) said that she wouldn’t be surprised if the government made “big changes” partly because “we are currently in the year prior to an election”.
Sir Steve Webb is a former minister of pensions and now a partner at LCP, an actuarial consulting firm. He said that the improvement in life expectancy at retirement, which was predicted at the last [pension-age] review, didn’t actually happen. The life expectancy at retirement is now two years lower than when they did their last review.”
Ex-Pensions Minister Baroness Ros Altmann said that the cost of long-term state pension provision might already be “overestimated” due to the fall in life expectancy projections.
Altmann stated that while the pandemic’s effect on older people is partly to blame, the NHS backlogs and crisis facing elderly care will likely prevent a sudden rise in life expectancy.
According to the Office for Budget Responsibility, the state pension bill will grow from PS110bn 2022/23 to about PS148bn 2027/28.David Gauke, a former Tory MP and the minister who announced the faster pension age rise in 2017, said it “may not be politically wise” to push through the pension age rise at this point in the electoral cycle but he added “for the long-term sustainability of the public finances an acceleration of the increase in the SPA is almost “certainly necessary”.
A spokesperson for Department for Work and Pensions stated that the government is required to periodically review the state pension age. The next review will be published no later than 7 May.