Plans to accelerate state pension age rise shelved for now — what does it mean for you?

Plans to bring forward a rise in the state pension age to 68 sooner than planned have been shelved by the government following a review. 

There's already a plan in place for a phased increase in state pension age from 66 to 67 by 2028, and to 68 between 2044-2046. However, the government was rumoured to be considering moving this forward to as early as the mid-2030s. 

Here, Which? explains why the state pension age is important for planning your retirement, and who would be most impacted by any changes to it. 

Why is your state pension age important?

The state pension age is the age you must reach before you are allowed to access your state pension, which might make up a large part of your income when you retire.

The state pension age is currently 66 for both men and women.

Two more increases are already set out in legislation. It will gradually rise to 67 for those born on or after April 1960 between 2026 and 2028, with another gradual rise to 68 between 2044 and 2046 for those born on or after 1977.

• Find out more: state pension age calculator

State pension age review results

The latest state pension age review confirmed the rises to 67 between 2026-2028 will take place as planned, and that another review will be carried out within two years of the next parliament to reconsider the rise to age 68.

Secretary of State for Work and Pensions Mel Stride confirmed to the Commons that two independent reports were commissioned for the review – an independent analysis from the Government Actuary based on life expectancy projections, and findings from Baroness Neville-Rolfe which considered relevant factors including life expectancy trends.

However, some data could not be considered as it's not yet available, including the long-term impact of the Covid pandemic and global inflationary pressures caused by the war in Ukraine. 

Mr Stride told MPs: 'Given the level of uncertainty about the data on life expectancy, labour markets and the public finances, and the significance of these decisions on the lives of millions of people, I am mindful a different decision might be appropriate once these factors are clearer.

'I therefore plan for a further review to be undertaken within two years of the next parliament to consider the rise to age 68 again.'

• Find out more: nine pensioner perks and benefits to boost your income

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Stalling life expectancy 

The DWP report found since the 2017 state pension age review was carried out, the rate of increase in life expectancy has slowed.

For example, in the 2014-based projections that informed the 2017 Review, life expectancy at age 65 was projected to reach 27.3 years by 2060, whereas in the latest 2020-based projections it is projected to reach 24.4 years — 2.2 years lower.

Stride told MPs: 'For most people and communities, people alive today are expected to live longer than their predecessors. Life expectancy is still projected to improve over time but, compared with the last review of state pension age, those improvements are expected to be achieved at a slower rate.'

• Find out more: how much do I need to retire?

'Kicking the can down the road' 

Although the decision not to increase state pension age to 68 even sooner than planned was broadly welcomed, some have accused the current government of merely delaying the decision.

It's worth noting that the next review will now take place after the next general election. It also follows violent protests in France after President Emmanuel Macron's proposals to raise its state pension age to 64.  

Alice Guy, head of pensions and savings at Interactive Investor said: 'It’s important to remember that this decision only kicks the can down the road. 

'The state pension age is still rising to 67 in between 2026 to 2028, and 68 between 2044 to 2046. Today’s reported announcement only delays the decision on whether to raise the state pension age to 68 earlier than 2046.'

Labour's shadow work and pension secretary Jon Ashworth welcomed the announcement and said it was the right decision, but raised concerns about stalling life expectancy rates. 

He added: '[This decision] is the clearest admission yet that a rising tide of poverty is dragging life expectancy down for so many.'

• Find out more: how much state pension will I get?

Why does the government review state pension age?

The Pensions Act 2014 requires the Secretary of State for Work and Pensions to regularly review state pension age.

This is because as the number of people over state pension age increases, the government must ensure it remains sustainable and affordable for current and future generations.

These reviews are informed by life expectancy data, the economic position and labour market, and the latest demographic trends. 

In its latest review, the government said it was committed to the principal of providing people with 10 years' notice of changes to the state pension age. 

• Find out more: change to state pension top-ups from July

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How to prepare for state pension age changes

Although the government has ruled out a change to the state pension age for now, the next review is likely to be in 2026. 

Work out how much you’ll need to retire

To help figure out how much you need in retirement, we've spoken to thousands of retired Which? members to see where their money is being spent.

Households with two people spent an average of just under £2,340 a month, or around £28,000 a year, to be 'comfortable' when we carried out research in 2022.

This covers all the basic areas of expenditure (which had a combined cost of £19,000 per year on average) and some luxuries, such as European holidays, hobbies and eating out.

• Find out more: how much do you need to retire?

Check your state pension forecast

The state pension forecast will provide you with an estimate how much state pension you could get when you reach state pension age. 

It will also show the number of qualifying years of contributions on your National Insurance record, and any gaps.

• Find out more: how to check your state pension forecast

Check your workplace pension 

Pension providers will send you a statement each year to tell you how much is your pension pot. 

You can also ask for an estimate of how much you’ll get and when to start taking your pension pot. If you are able to, you should consider upping your contributions from the minimum 5% while you're still working. 

Some employers will match your contributions, so if you can increase them, even just by 1%, it could make a huge difference to your overall pot – especially if you start early.

As with all pension contributions, you'll also benefit from tax relief.

• Find out more: workplace pensions explained 

Get free pensions advice 

You can get free, impartial guidance from the Money & Pensions Service.

If you're over 50, you can book a free guidance session with a specialist.

We also have a wealth of free Which? pensions advice – our guide on how to plan for retirement is a good place to start.

• Find out more: how to get retirement and pension advice

The story was first published on 9 February, and was last updated on 31 March after the government's review into the state pension age was published.