Chancellor Rachel Reeves has called for a review into the possibility of raising the state pension age to ensure it remains “sustainable and affordable”.
The Government is set to report on this review in March 2029, with Ms Reeves stating that it’s “right” to reassess the age at which individuals can start receiving their state pension as life expectancy continues to rise.
Currently, the state pension age stands at 66, but this is expected to increase to 67 by 2028, and the Government is legally obliged to review this age periodically. Speaking to reporters, the Chancellor said: “We have just commissioned a review of pensions adequacy, so whether people are saving enough for retirement, and also the state pension age.”
She added: “As life expectancy increases it is right to look at the state pension age to ensure that the state pension is sustainable and affordable for generations to come. That’s why we have asked a very experienced set of experts to look at all the evidence.”
The Department for Work and Pensions announced the review on Monday, which will include an independent report led by Dr Suzy Morrissey, examining factors relevant to the Review of State Pension Age, alongside the Government Actuary’s Department’s analysis of the latest life expectancy projections data.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, commented: “There will be many factors that need to be assessed during this review of the state pension age. One of the most important will be healthy life expectancy which according to the latest data hovers in the early 60s.”
She added: “This means the reality is that many people will face real difficulties in continuing to work until their mid-to-late 60s and could face a sizeable income gap while they wait to receive their state pension.”
Rachel Vahey, head of public policy at AJ Bell, commented: “An ageing population places an increasing burden on taxpayers, with state pension costs rising and fewer working-age taxpayers to cover the cost.”
She added: “Future governments will hope that an improved economy and growing tax receipts will help alleviate some of the pressure. But that can’t be guaranteed and there needs to a be a credible plan for maintaining affordability.”
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