Second State Pension Age Review (2021/22)

Last updated on March 30th, 2023

The second state pension age review was launched in December 2021 and will continue until it reports in 2023. The review is to look at state pension ages and whether or not these should be increased, and if so when.

The first state pension review took place in 2017 and this recommended the increase in state pension age to 68 over a defined period of time. A number of conclusions were drawn from the report and it also stated that the next review should take place 6 years from then – hence the second report is due in 2023.

This is an extract from the conclusion of the 2017 report:

As has been shown in recent decades, life expectancy projections are uncertain, and particularly over longer projection horizons. Given this uncertainty, the Government agrees with John Cridland that it is too early to set a formal timetable beyond age 68 at this stage. The Pensions Act 2014 provides a mechanism to ensure regular reviews of State Pension age so that changes are smooth, predictable and well-flagged in advance. The next review, which will conclude by 2023, will consider whether rises beyond 68 are needed and when. However, the Government believes that setting some parameters for the future is important for individuals and for Government planning. In the long run, the Government is minded to commit to ‘up to 32%’ as the right proportion of adult life spent in receipt of State Pension. Given what we already know about the costs of an ageing population, this seems the option which best enables the Government to plan future State Pension age rises with sufficient assurance that they should be deliverable in line with the principles of clarity and certainty we have committed ourselves to. We will carry out a further review before legislating to bring forward the rise in State Pension age to 68, to enable consideration of the latest life expectancy projections and to allow us to evaluate the current rises in State Pension age.

This is the scope of the second state pension age review (taken from the government website):

The review will consider whether the rules around pensionable age are appropriate, based on the latest life expectancy data and other evidence.

The Pensions Act 2014 requires government to regularly review State Pension age, and in accordance with law, this latest Review must be published by 7 May 2023.

State Pension age is currently 66 and two further increases are currently set out in legislation: a gradual rise to 67 for those born on or after April 1960; and a gradual rise to 68 between 2044 and 2046 for those born on or after April 1977. The first Review of State Pension age was undertaken in 2017 and concluded that the next Review should consider whether the increase to age 68 should be brought forward to 2037-39 before tabling any changes to legislation.

As the number of people over State Pension age increases, due to a growing population and people on average living longer, the government needs to make sure that decisions on how to manage its costs are, robust, fair and transparent for taxpayers now and in the future. It must also ensure that as the population becomes older, the State Pension continues to provide the foundation for retirement planning and financial security.

Therefore, this review will consider a wide range of evidence, for example, it will:

• examine the implications of the latest life expectancy data
• provide a balanced assessment of the costs of an ageing population and future State Pension expenditure
• consider labour market changes and people’s ability and opportunities to work over State Pension age
• and develop options for setting the legislative timetable for State Pension age that are transparent and fair

So the worst case scenario could be that state pension age will increase quicker than was previously decided and if the state pension age of 68 is brought forward to 2037 then that would affect people born from 1969 onwards (rather than those born from 1977 onwards as it is at present). However, that is just one aspect of the review and changes to life expectancy may also affect any decisions made as well as the percentage of their adult life people spend in retirement.

The review may also look at increasing state pension age further, possibly even to age 70 at some point.

In order to conduct the review, the government will be commissioning two independent reports in particular, as follows (taken from the government website):

• The Government Actuary will provide a report which must assess the age of entitlement in legislation by analysing the latest life expectancy projections;
• The report on other relevant factors will consider recent trends in life expectancy and the range of metrics we could use when setting State Pension age. This is to ensure the way we set State Pension age is robust, transparent and provides fairness to both taxpayers and pensioners. This report will be led by Baroness Neville-Rolfe DBE., CMG. The Terms of Reference for this report can be found in the attached PDF.

We will be monitoring the progress of the review and obviously updating the site when any conclusions are drawn and if there are any changes to state pension ages.

Update: March 2023

The Independent Review has been published and you can check out the important details here.