A further rise in the state pension age is likely according to a new study of future trends.
Current legislation specifies a gradual rise to 67 for those born on or after April 5, 1960, and a gradual rise to 68 between 2044 and 2046 for those born on or after April 5, 1977. Since October 2020 the retirement age for both men and women is 66.
However, experts are now warning future retirees will have to wait until 69 to be eligible for their state pension.
A study from consultants the Centre of Future Studies and Evelyn Partners showed longer life expectancy may push up the retirement age.
The Decades of Change report suggested that many younger people had “unrealistic” expectations at retiring once they reach the age of 60 and that the rising cost of supporting the ageing population was the main driver for the projected rise in age.
Recruiting older workers
Dr Frank Shaw of the Centre of Future Studies, said the definition of “retirement” was likely to change: “In the future, the milestone of retirement is going to be even harder to reach.
“In the past, working and being retired were two contrasting points in life. However in the future this will become blurred as the UK’s ageing population will need to financially supplement their increased longevity.”
A government state pension age review is under way to determine whether age increases should be accelerated.
It is considering whether the increase to age 68 should be brought forward to 2037-39 before any changes to legislation are tabelled.
The Department for Work and Pensions said the independent review was taking place because the number of people over state pension age was increasing.
This was attributed to a growing population and “people on average living longer”. This has not gone without some challenge by commentators who note that life expectancy in the UK had actually fallen in recent years.
Life expectancy at birth in the UK in 2018 to 2020 was 79 years for males and 82.9 years for females; this represents a fall of seven weeks for males and almost no change for females from the previous period of 2015 to 2017.
Tom Selby, head of retirement policy at investment firm AJ Bell, said that although life expectancy increases had halted, it did not necessarily follow that further state pension age rises would not go ahead.
He implied that the motivation for increasing the state pension age was more to do with public finances debts than life expectancy: “Given recent data points to a slowdown in life expectancy improvements, with some regions of the UK seeing average life expectancy go backwards, any move to increase the state pension age will inevitably be hugely controversial.
“On the other side of the coin, a chancellor nursing a £400bn black hole in the public finances will likely have serious reservations about pushing back planned state pension age rises or halting them altogether.”
In 2019 the right wing think tank Centre for Social Justice advocated raising the state pension age to 75.