The state pension age is set to increase twice in the UK in the next two decades – to 67 by 2028 and to 68 by 2039.
But analysis by advisory firm LCP found that these plans have been “blown out of the water” as the expected improvements in life expectancy have failed to materialise.
The company believes that if the government sticks to its 2013 policy of linking pension age to life expectancy – as calculated by the Office for National Statistics (ONS) – the increase to age 67 should not happen until at least 2051.
Additionally, a move from 67 to 68 would not bee needed until the mid-2060s, it added.
The ONS projections for 2020 could further erode the government policy if they will take into consideration the impact of covid-19, which will undoubtedly impact life expectancy calculations and imply even further delays to state pension age increases.
Although pushing back increases would cost the Treasury around £195bn ($257bn, €228bn) in savings on state pension expenditure, the measure could provide a ‘reprieve’ to over 20 million people born in the 1960s, 1970s and 1980s, LCP claims.
‘Revisited’
Steve Webb, partner at LCP, said: “The government’s plans for rapid increases in state pension age have been blown out of the water by this new analysis.
“Even before the pandemic hit, the improvements in life expectancy which we had seen over the last century had almost ground to a halt. But the schedule for state pension age increases has not caught up with this new world.
“This analysis shows that current plans to increase the state pension age to 67 by 2028 need to be revisited as a matter of urgency. Pension ages for men and women reached 66 only last year, and there is now no case for yet another increase so soon.”
