A rise in the state pension age to 68 could be delayed although no decision will be taken until after the next general election, the Government has said.
Work and Pensions Secretary Mel Stride said he agreed the planned increase in the state pension age from 66 to 67 should occur between 2026 and 2028, noting this has been legislated for since 2014.
MPs heard an independent report has recommended the rise from 67 to 68 should take place between 2041 and 2043, four years later than previously accepted by the Government but still earlier than set out in legislation.
Mr Stride said the current rules for the increase to 68 “remain appropriate” but also noted he is “mindful a different decision” might be needed once a further review is conducted within two years of the next Parliament.
This review would assess various factors including life expectancy and public finances. The next election is expected to take place in 2024.
Mr Stride, making a statement to the House of Commons, said: “As a society we should celebrate improvements in life expectancy, which has risen rapidly over the past century and is projected to continue to increase.
“Since the first state pension age review was undertaken in 2017, however, the increase in life expectancy has slowed.”
He added: “Given the level of uncertainty about the data on life expectancy, labour markets and the public finances, and the significance of these decisions on the lives of millions of people, I am mindful a different decision might be appropriate once these factors are clearer.
“I therefore plan for a further review to be undertaken within two years of the next Parliament to consider the rise to age 68 again.
“This will ensure that the Government is able to consider the latest information, including life expectancy and population projections, that reflect the findings of the 2021 Census data, the latest demographic trends, and the current economic situation.
“We will also be able to consider the impact on the labour market of the measures we have announced to increase workforce participation and any other relevant factors.
“The current rules for the rise from 67 to 68 therefore remain appropriate and the Government does not intend to change the existing legislation prior to the conclusion of the next review.”
Mr Stride said Conservative peer Baroness Neville-Rolfe, who conducted one of the reviews, was unable to take into account the long-term impact of “challenges” including the Covid-19 pandemic and inflation linked to Russia’s renewed invasion of Ukraine.
For Labour, shadow work and pensions secretary Jonathan Ashworth said stalling life expectancy rates are a “damning indictment” of the Government.
He said: “Today’s announcement that they are not going ahead with accelerating the state pension age is welcome, and it is the right one.
“But it is the clearest admission yet that a rising tide of poverty is dragging life expectancy down for so many, and stalling life expectancy, going backwards in some of the poorest communities, is a damning indictment of 13 years of failure which the minister should have acknowledged and apologised for today.”
Mr Ashworth claimed that previous work and pensions secretaries had said it was “explicit Government policy to bring forward the increase in the state pension age to 68 between 2037 and 2039”.
He asked the minister: “Can he confirm whether the review that he has announced for the future will still consider bringing forward an increase in the state retirement age to 2037? Does that remain the Government’s policy ambition or is that now abandoned?”
Mr Stride, in his reply, said: “Given that we have made a commitment to a 10-year notice period, that would suggest that if the next review and I say if, it is for others to decide this in the course of time, we are say in 2026, that would indeed bring those dates as possible, but of course it wouldn’t preclude decisions being taken for dates further out than 2037-39.”
Mr Stride claimed pensioner poverty “has improved right across the board since 2009/10” adding this was “not least because of the policies pursued by this Government”.
Former pensions minister Sir Steve Webb, who is now a partner at consultants LCP (Lane Clark & Peacock) raised concerns about the potential for the state pension age to rise in the future.
He said: “It is welcome that the Government has taken account of the big slowdown in life expectancies in recent years and has held off any further increases in state pension ages for now.
“But there is a sting in the tail in the analysis which the Government has published today.
“If it adopts the idea of placing a cap on the share of national income spent on pensions, this would mean a rapid increase in pension ages, including a rise to 69 before the end of the 2040s.
“This would be a draconian shift in policy which would be likely to mean today’s younger workers facing a pension age of 70 or above.”
The Institute for Fiscal Studies (IFS) has suggested that the cost to the Exchequer of not introducing a rise in the state pension age from 67 to 68 from the late 2030s could be around £8 billion to £9 billion per year.
Enjoy the convenience of having The Sunday Post delivered as a digital ePaper straight to your smartphone, tablet or computer.
Subscribe for only £5.49 a month and enjoy all the benefits of the printed paper as a digital replica.Subscribe