Independent Review of State Pension Age

The latest independent review of State Pension age (commissioned by the Secretary of State for Work and Pensions) has just been published by the government and there are recommendations with regards to the increase in state pension age to 67, 68 and 69. This review follows on from the one undertaken by John Cridland that was published in 2017. None of the recommendations from either of the reviews have been enacted in legislation at this time so things can still change!

Below is a brief summary from the report via excerpts of the recommendations and we will work on the finer details as soon as possible and check the updates that are required to the articles published on this website. Read More

State Pension Age Increases- Will I be Affected?

For anyone who is keeping an eye on the State Pension age review they will be interested to hear that John Cridland’s report on the Review in State Pension Ages was published today by the government. The Pensions Act 2014 requires that State Pension ages are reviewed in every parliament and this review was due to report by May 2017.

Mr Cridland’s report also coincided with a review by the Government Actuaries Department (GAD) which was due to look at life expectancy and what percentage of people’s lives they would spend in retirement, therefore being more facts and figures based rather than taking into account other factors. The two reports will be taken into consideration by the government in any future legislative change in State Pension ages.

The benchmark guide that was used for both reports was the supposition that people should spend up to one third of their lives in retirement and with the increase in life expectancy this would obviously mean an increase in the State Pension age at some point. However, in order to decide on that point, various assumptions and predictions in life expectancy over the current decades would need to be made.

According to the State Pension age timetable issued by the Department for Work and Pensions in 2013:

The Government is not planning to revise the existing timetables for the equalisation of State Pension age to 65 or the rise in the State Pension age to 66 or 67. However the timetable for the increase in the State Pension age from 67 to 68 could change as a result of the review.

This means that anyone born before 6 March 1961 will not have their State Pension age changed any further. Anyone born after this date (as long as they are given at least 10 years notice) could have their retirement age increased. So any changes will only affect those retiring after 2028 at the earliest (but this is unlikely to be until much later according to the Cridland report).

The Cridland report advises that the increase in State Pension age from 67 to 68 is brought forward to 2037-39. Currently legislation is in place for the retirement age to be increased to 68 for those who were born after 5 April 1977 with a staggered increase from 67 to 68 for those born between 6 April 1977 and 5th April 1978.

With the changes proposed in the Cridland report this may now apply to people who were born after 1971 with a possible staggered increase for those born between 1970 and 1971*. So those people who are currently in their late 40s or below may be affected by an increase in their State Pension age.

The report also advises that further increases to the State Pension age are only effected no more often than every 10 years.

The report from the GAD proposes even earlier increases to the State Pension age and in theory the increase could happen at any time after 2028 but this is less likely to happen (we hope). The GAD report also proposes that anyone aged 30 or below (i.e. those born after 1988 as legislation will likely not happen or at least come into force next year) should have a State pension age of 70. With life expectancy increases this proposal could indeed become a reality, if not now, then possibly at a later date.

Summary

So if you are wondering if you are affected by the proposal in increases to the State Pension age then you may well be affected if you were born after 6th April 1970 and it is possible (but we believe much less likely) you will be affected if you were born after 5th April 1961.

However, these are currently just proposals and the government will need to review both reports and decide on any changes they wish to make before introducing any legislation which will likely not be law until at least 2018.

There will be another review of State Pension ages due in 2023 and so it is possible that any further changes to the State Pension age that go beyond age 68 will not be made until after this review when more recent figures on life expectancy are available.

*based on previous staggered increases
Retirement Age Parliamentary Debate 7 January 2016

On 7 January 2016 the retirement age for women born in the 1950s will be debated in Parliament in a initiative led by SNP MP Mhairi Black.

Due to changes bought in by both the Pensions Act 1995 and the Pensions Act 2011, many women have suffered an increase to their state pension age not once, but twice, with women arguing that the second increase was only giving them a short amount of notice to be able to change their retirement plans.

Many women who are due to retire in the next few years are now struggling to come to terms with the increased retirement ages and how they are going to fund them. The point of the debate is that these women were not given enough notice of the changes and the implementation of these changes should be reconsidered in terms of the swiftness of state pension age equalisation.

There is no doubt in most people’s minds that pension ages need to be equalised but the second change of age for women born in the 50s to having to retire at age 66, was accelerated by the Pensions Act 2011.

Although there is an online petition in place that has garnered tens of thousands of signatures after a group was set up to challenge the changes, the debate on 7th January is separate to this in that it was requested by Ms Black to the Backbench Business Committee which can agree on debates requested by MPs that is thinks are in the interest of the people.

We will be eagerly watching the debate and any outcome that results from it and will keep you notified of those on our website. Whether or not it will be possible to backtrack on the changes is a difficult question but perhaps there is the possibility of some transitional arrangements being put into place for those who are worst affected.