New pension age shake-up could hit retirement hopes

MILLIONS could be forced to tear up their retirement plans under a major overhaul of the state pension age.

A review announced by the Department for Work and Pensions yesterday could pave the way for plans to increase the state retirement age for those born in the 1970s by seven years.

Led by Tory peer Baroness NevilleRolfe, it will consider whether workers should wait until 68 to collect their state pensions from 2037, rather than 2044 as currently set out in law.

The age at which someone can start claiming their state pension will gradually rise from 66 to 67 between 2026 and 2028.

It is due to increase again to 68 between 2044 and 2047, but the new review will consider Government plans to bring this forward to between 2037 and 2039.

The state pension is currently worth more than £9,350 a year to retirees. Critics fear the Government wants to hike the retirement age sooner to save money.

Baroness Altmann, a former pensions minister, said: ‘If [the review] is a smokescreen to justify raising the state pension age further, that would be a serious mistake and a very bad social policy decision.’

The Tory peer added that she hoped the review would instead consider allowing some to take their pensions earlier if they had a poor life expectancy or were in ill-health.

She said: ‘We already pay the lowest state pension in the developed world. We already have a pension system that is stacked against those who aren’t well off. It is wrong to look to cost savings in that area.’

Former pensions minister Sir Steve Webb said there was a chance the Government would push up the state pension age regardless of the review.

‘There is a risk [the review] is for show and they will just do what the Treasury tells them,’ he added.

Becky O’Connor, of the investment service Interactive Investor, said: ‘Many will have spent much of their working life expecting to retire at 65. They have been disappointed before and look set to be disappointed again.

‘Continually moving the goalposts like this doesn’t just provoke disillusionment, it has big implications for retirement planning.’

Work and Pensions Secretary Therese Coffey, announcing the review, said: ‘We need to make sure our decisions on how to manage the costs of state pension provide fairness to both taxpayers and pensioners.’