Could the pension age be raised yet again?

BRITAIN’S state pension age is set to be raised again under a Government review to be launched next month.

Ministers are to unveil a radical review of the pensions regime this month, which could put greater weight on the number of years somebody has been paying in for.

Government sources insist no decision has been taken to further increase the existing state pension age, which is already due to rise to 68 by 2044.

But figures produced by the independent Office for Budget Responsibility (OBR) suggest this process will have to be accelerated to keep pace with rising life expectancy.

The OBR forecasts that the pension age will have to rise to 69 by the late 2040s before increasing again to 70 by the early 2060s.

This would mean people in their twenties and thirties today potentially having to work an extra year or two more than they are already expecting before being able to retire. Men of this age may end up having to work up to five years longer than their fathers, while women could be forced to work as much as ten years longer than their mothers.

However, the pill could be sweetened for some workers as the review will, for the first time, consider whether certain groups should be allowed to claim their pensions early.

Ministers have asked officials to examine whether the right to claim a pension could be triggered after working for a set number of years.

This could allow those who leave school at 16 to start work to claim their pension much earlier than those who study for a degree and do not enter the world of work until years later.

The year-long review, which began this month, will also look at variations in life expectancy between different groups and even different regions of the country.

It will analyse whether the state pension age could be replaced by an age range, allowing some people to retire relatively early on a lower pension, while others stay working for longer in return for a more generous pension a few years later.

Ministers, who will have the final say over whether the pension age should rise, have previously indicated that people should, on average, expect to be able to enjoy a third of their adult life in retirement.

This raises the possibility that manual workers in some areas might be allowed to claim their pension earlier than those who have spent their working lives in offices in other places.

But ministers have ruled out setting a higher pension age for women, even though they have longer life expectancy. A Government source said the move would be ‘politically unacceptable’, and probably illegal under equality laws.

Chancellor George Osborne argued last month that increasing the state pension age in line with life expectancy is essential if Britain’s welfare system is to remain affordable in the long term.

The state pension age for women is already rising from 60 to 65 in line with men. It will then rise to 66 for both men and women in 2020 – a move forecast to save the Treasury more than £5billion a year.

But increases to the state pension age are highly controversial, with critics warning that variations in life expectancy mean that some people will die before claiming pensions that others will enjoy for years.

Pensions minister Ros Altmann declined to comment on the review in detail, but said: ‘I don’t think just looking at pushing up the pension age is enough – it is too simplistic.

‘We may not change anything, but we need to review whether we are doing things in the best and fairest way.’

‘Best and fairest way’