A DWP report has suggested the state pension age should rise to 69 over the period 2046-48 and the rise to 68 should take place between 2041 and 2043
The Department for Work and Pensions has received a stark warning that a state pension age rule change must be brought forward sooner rather than later. The Labour Party government faces pressure to accelerate the hike of the state pension age to 69 as it conducts its review of the DWP regulation.
Baroness Neville-Rolfe delivered the bombshell recommendation: “Current projections of GDP and state pension-related expenditure suggest that state pension age should rise to age 69 over the period 2046-48.” She demanded urgent action, declaring: “This possible rise should be reassessed at the next state pension age review in the light of new fiscal and life expectancy projections.”
The peer also proposed that the bump up to 68 should happen between 2041 and 2043. Such a move would accelerate the existing schedule for raising the state pension age. It comes after news of a £200 payment for state pensioners born before 1959 to be made soon.
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Mark Pemberthy, benefits consulting chief at Gallagher, warned: “Limiting the cost of state pension as a percentage of GDP is complex and will be dependent on a number of variables including how successful our economy is in the future and also how fast the state pension is increased each year.”
He stressed the broader implications, stating: “The triple lock will not be part of the state pension age review, but must be a consideration in the wider pension review if pensions are going to be sustainable for future generations.”
Baroness Neville-Rolfe’s analysis highlights numerous considerations that must be weighed when determining the state pension age timeline, reports Birmingham Live.
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These encompass long-term viability and cost-effectiveness, alongside fairness between generations. She proposed two key measures: the percentage of adult life that individuals should, on average, anticipate spending in retirement should be capped at 31%, and the government should limit State Pension-related expenditure to a maximum of 6% of Gross Domestic Product.
In simpler words, according to these criteria, the state pension age would rise to 68 between 2041 and 2043 to help reduce costs. However, the government has not yet formally committed to this change. However, current legislation plans to increase the age to 68 between 2044 and 2046.
The government is expected to reconsider this timing based on life expectancy and other factors such as the current economic situation and demographic trends. An increase in the state pension age from 66 to 67 is already set to take place between 2026 and 2028, according to AJ Bell.
