Government Actuarys Department
The government has announced that the State Pension age (SPa) timetable will, for the time being, remain unchanged from the current legislated timetable:
- SPa will increase from 66 to 67 between April 2026 and April 2028
- SPa will increase from 67 to 68 between April 2044 and April 2046
The governments second periodic review of the State Pension age sets out plans for a further SPa review within 2 years of the next Parliament. That review will reconsider the rise of the SPa to age 68. The government remains committed to the principle of providing 10 years notice of changes to the SPa.
The governments review was informed by reports from the Government Actuary and Baroness Neville-Rolfe GADs Technical Bulletin summarises the findings and recommendations of these 3 reports.
Uncertainty in future life expectancy trends
The Government Actuarys report sets out the results of calculations illustrating when SPa would increase under different scenarios.
The report considers what the timetable may look like for different target proportions of adult life being spent in retirement and different projections of life expectancy. Other assumptions were prescribed by the Secretary of State, such as the age someone starts their working life and the life expectancy tables to be considered.
The calculated SPa timetables are shown to be highly sensitive to the proportion of adult life in retirement and to the life expectancy assumptions adopted.
Recent slowing improvements in life expectancy and the unknown long-term impact of the COVID-19 pandemic makes projecting future trends even more uncertain.
Sustainability of the State Pension
Baroness Neville-Rolfes report explains that there are many factors to take account of when setting the SPa timetable. These include sustainability and affordability, as well as intergenerational fairness.
Her recommendations included 2 metrics:
- the proportion of adult life that people should, on average, expect to spend in retirement should be up to 31%
- the government should set a limit on State Pension-related expenditure of up to 6% of Gross Domestic Product
Based on these metrics, SPa would increase to 68 between 2041 and 2043.
Government report
The government welcomed the findings from the Government Actuary and Baroness Neville-Rolfe. It also noted a level of uncertainty in relation to the longer-term data on life expectancy, labour markets and the public finances.
Due to this uncertainty, the government concluded that the current rules for the rise to 68 remain appropriate. It does not intend to change the existing legislation prior to the conclusion of the next review which is planned to be within 2 years