Pensions Minister, Steve Webb, today launched an internal Review to consider when state pension age should be raised to 66. The Coalition government intends to bring forward the 2024 target set by the previous administration.
The Minister’s announcement follows George Osborne’s Emergency Budget on 22 June, in which he pledged to ‘accelerate the increase in State Pension Age’.
Previous timetable overhauled
The previous government had set out a timetable for raising state pension age from 65 to 66. This was to have happened in 2024 for men and 2026 for women. A further rise to 67 was scheduled for 2034-2036, with a final hike to 68 in 2044-2046.
Announcing the new Review, which is gathering evidence from interested parties between 24 June and 6 August and will be published in the autumn, the Department for Work and Pensions (DWP) observes that ‘the demographic and the economic situation have changed since these figures were set in legislation’. The Coalition has indicated that the new date for the rise will not be sooner than 2016 for men and 2020 for women.
Triple pension guarantee
Although the government intends to put up state pension age more rapidly, it has linked this to an earlier commitment to increase state pension by the higher of earnings, prices or 2.5%.
Iain Duncan Smith, the Secretary of State for Work and Pensions, said today: ‘People are living longer and healthier lives than ever, and the last thing we want is to lose their talent and enthusiasm from the workplace due to an arbitrary age limit. We also need to recognise that to meet the challenge of providing an affordable, stable pensions system in a society with ever increasing life expectancy, people will need to work longer.
‘And we will reward their longer working life by making sure that when they do retire, their pension is worth getting. We are taking radical action to restore the earnings link with the triple guarantee, ensuring our pensioners get the best possible deal.’
The DWP notes that other countries are also in the process of raising their state pension age. Iceland, Norway and the USA already have a state pension age of 66 or higher, while Australia, Denmark, Germany, Ireland and Israel are scheduled to increase theirs to 66 before 2026.
Some countries have a lower state pension age than the UK however, including France at 60 (rising to 62 by 2018), Hungary at 62 (rising to 65 by 2017) and the Czech Republic at 62 (rising to 63 for men by 2016). State pension age was set at 65 in the UK in 1925.
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