Retirement age raised to 68 for 5.8m workers

Retirement age to rise seven years earlier than planned as Government tries to save £74billion

One in seven workers will have their retirement delayed by a year after the Government said it would increase the state pension age to 68. It will rise over two years from 2037, seven years earlier than planned, meaning 5.8million people will have to work for an extra year.

ONE in seven British workers will have to work an extra year after the Government said it would increase the state pension age to 68.

David Gauke, the Work and Pensions Secretary, said the pension age will rise to 68 over two years from 2037, seven years earlier than planned.

Pensions experts said the decision meant that an additional 5.8 million workers will have to work for an extra year before they can receive the state pension.

The change was recommended in the Cridland Review earlier this year and will affect workers born between April 6 1970 and April 5 1978.

Crucially the Government said it would not look to enshrine the change in law until 2023, after the date of the next general election in 2022. This means that the change could be reversed as Labour said it would keep the pension age at 66.

The Government has come under mounting pressure to help tackle the expected rise in the cost of pensions as well as the growing number of nonworkers who will need to be supported by working people.

The Department for Work and Pensions estimates that the number of people over state pension age is expected to grow by a third between 2017 and 2042, from 12.4million to 16.9million.

Mr Gauke told the House of Commons that the change in the state pension age would save the Treasury £74billion by 2045-46 compared with the previous proposals.

He said: “As the Cridland Review makes clear, the increases in life expectancy are to be celebrated, and I want to make clear that even the timetable for the rise that I’m announcing today, future pensioners can still expect on average more than 22 years in receipt

of the state pension. But increasing longevity also presents challenges to the Government.

“There is a balance to be struck between funding of the state pension in years to come whilst also ensuring fairness for future generations of taxpayers.”

The state pension age is already due to go up in stages, with a rise to 67 by 2028. However, the next increase to 68 was not due to happen until between 2044 and 2046.

Tom Mcphail, head of pensions research at Hargreaves Lansdown, the financial services company, said: “The Government deserves some credit for taking a tough decision which based on current life expectancy was probably the right decision to make.” He said it was not clear how this would affect the age – currently 55 – at which pensioners can access their private pension.

Caroline Abrahams, charity director at Age UK, said: “It is astonishing that this is being announced the day after new authoritative research suggested that the long-term improvement in life expectancy is stalling. For people in midlife and younger their state pension may seem a lifetime away but the fact is that the change announced today will have a real impact on them later in life.”

The latest change comes after the Conservative manifesto pledged to abandon the triple lock on state pensions rises, which sees it rise in line with either wages, inflation or earnings, whichever is highest.

However, the pledge was not mentioned in the Queen’s Speech after Theresa May failed to secure a Commons majority.

The policy was toxic for the Conservatives during the election and widely interpreted as a potential tax raid on the party’s core voters.