10m may have to work for longer

Pension age could be raised to 68 in 2035 - 11 years earlier

UP to ten million Britons may have to work an extra year before retirement, it emerged yesterday.

Ministers are considering proposals to raise the state pension age to 68 as soon as 2035 – 11 years earlier than planned.

The move would mean around ten million people born between 1968 and 1979, and due to receive their pension when they turn 67, would have to work for an extra year.

The Department for Work and Pensions confirmed that a review was under way but insisted no decisions had been reached.

Sir Steve Webb, a former pensions minister, said there was ‘no justification’ for raising the state pension age again at a time when life expectancy rates had stalled. The age threshold was already set to be brought forward to 2039 following a previous review. But ministers have yet to legislate for the change, meaning the legal date remains 2046.

Sir Steve said: ‘Although it is not in law, the Government have banked the move to 2039 and I would expect them to come forward another couple of years to 2037, although they may go further.

‘From the Treasury’s point of view it is an easy way to bank a lot of money, albeit some way in the future. And they may get away with it because 2037 feels like it’s so far away that people won’t get upset about it.

‘But there is no case for it. The last review, which brought things forward by seven years, was based on the assumption that life expectancy would have increased by two years. But life expectancy has stalled. Bringing it forward again now would just be a cost-saving exercise – there is no justification for it.’

The issue has split the Government, with the Treasury said to be

pushing for 2035 and Work and Pensions Secretary Mel Stride wanting to delay the rise to 68 until 2042.

A source close to Mr Stride confirmed that he had concerns about forcing millions of people to retire later at a time when life expectancy rates were not increasing.

‘The legislation that set up the review is very clear that life expectancy is a key factor that has to be taken into account,’ the source said. ‘Fairness for pensioners is something Mel is very concerned about.’

A Treasury source said Chancellor Jeremy Hunt had yet to give a view on the issue, pointing out that any savings would arrive far too late to help him balance the books. Another Whitehall source said the Treasury was ‘pushing for 2035’. The review is due to be published in May, but could be brought forward and announced at the Budget.

Proposals to raise the state pension age in France from 62 to 64 have triggered strikes and protests.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said the Government faced a ‘tricky balancing act’.

She added: ‘We have fewer working age people supporting an increasing ageing population and costs are enormous. However, we also have to face the very real prospect that many people simply are not well enough to work until age 68.’

Caroline Abrahams, of the charity Age UK, said: ‘Any decision by the Government to make today’s 50somethings wait longer for their state pension will consign hundreds of thousands of people to a difficult and impoverished later life.’

A Department for Work and Pensions spokesman said: ‘No decision has been taken on changes to the state pension age.

‘The Government is required by law to regularly review the state pension age and [a review] is currently considering, based on evidence including latest life expectancy data and two independent reports, whether the rules remain appropriate.’

‘Impoverished later life’