The decision on increasing in State Pension Age to 68 by 2039 has been kicked down the road
We commented in a recent Bulletin on an Institute of Fiscal Studies article on the question of when the State Pension Age (SPA) should be raised to 68. As a reminder:
- The Pensions Act 2007 set the timing of the move from an SPA of 67 to 68 between April 2044 and April 2046, but
- In 2017 the final Cridland Report recommended the change should be brought forward to April 2037-April 2039, and
- The Government’s response, from the then Secretary of State for Work & Pensions, David Gauke, was to accept the advice, but defer a final decision until a further review, due by 7 May 2023. This was seen as at least partly motivated by the fact that an fixed-term parliament election was due in 2020 and the Government did not want pull the trigger before the polls closed.
The question has now been (un)answered, with history largely repeating itself. On 30 March 2023,t he fifth Secretary of State since Mr Gauke, Mel Stride, published the State Pension Age Review 2023, but decided that the eventual SPA 68 decision should be taken after a further review to be carried out ‘within two years of the next Parliament’. In other words, after next month’s local elections, after next year’s likely general election and by January 2027 at the latest. At the limit, such timing would just meet the requirement to give at least ten years’ notice of a change to SPA, if 2037-2039 goes ahead.
The accompanying press release says the delay is required because ‘This gives the Government appropriate time to take into account evidence which is not yet available on the long-term impact of recent challenges, including the Covid pandemic and global inflationary pressures. These events bring a level of uncertainty in relation to the current data on life expectancy, labour markets and the public finances.’
Mr Stride also confirmed, as expected, that the move to an SPA of 67 will start in April 2026.
Comment
As we have shown in earlier Bulletins and as others have noted, the demographics have worsened considerably since the Cridland report, which used ONS life expectancy figures from 2014. It is hard to envisage that fresh post-pandemic mortality data is going to show a rapid reversal of the 2014-2020 trend.
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