New reports published today could see some younger people having to wait until they are 70 to get the state pension and the triple lock guarantee disappearing after 2020.
The final report of the Cridland review and a separate report from the Government Actuary’s Department (GAD) carry proposals which could have far-reaching consequences for both future generations and current retirees.
The government is due to make a decision on the proposals by May.
State pension age rises
The main recommendation from the Cridland report is that the state pension age should rise to 68 between 2037 and 2039 instead of between 2044 and 2046.
This would mean that anyone under the age of 45 would qualify for the pension at 68 at the earliest – a change that would impact around 5.8 million people.
Recommendations contained in the GAD report include a state pension age of 70 for anyone born after 6 April 1986, which would impact people aged 30 or younger today.
This is the more extreme GAD scenario and would see the state pension age reaching 70 by 2056.
Find out more: state pension age calculator – discover when you’re currently set to qualify
Potential demise of the triple lock
The triple lock guarantee looks set to disappear in the next Parliament. This currently guarantees that the basic state pension rises each year by the higher of inflation, the increase in average earnings or 2.5%.
The guarantee is expensive to maintain and there has been previous speculation that the government might choose to scrap it to combat the rising cost of the state pension.
Another suggestion from the reports is the introduction of an option to part-defer the state pension. This would see people take some of their pension and receive an enhanced amount when they decided to take the rest. It has also been suggested that those deferring the state pension could again receive a lump sum in exchange for delaying taking it.
A mid-life MOT to help people plan for later life was also put forward in the reports.
Find out more: how much state pension will I get? – how to calculate your entitlement
The Cridland review
John Cridland was appointed as the government’s independent reviewer of state pension age in March 2016 and delivered an interim report in October 2016. The initial brief was to make recommendations on a suitable state pension age, with affordability, fairness and longer working lives in mind.
From December 2018, the state pension age will rise for both men and women, until it reaches 66 in October 2020 and 67 between 2026 and 2028. The recommendations will not affect the state pension age before April 2028.
Under the current timetable, the pension age is then scheduled to rise to 68 from 2044 to 2046, but Mr Cridland’s proposals could see the increase brought forward to between 2037 and 2039.