Pension age rise review

Posted: 29th November 2011

In his Pre-Budget Report, the Chancellor of the Exchequer, George Osborne, has announced plans to bring forward the increase in the State Pension Age (SPA) to 67.
For men, the SPA is currently 65. For women, the SPA started to increase gradually from 60 on 6 April 2010, and will reach parity with the SPA for men by November 2018. The SPA for both men and women will rise to 66 by October 2020. Current legislation provides for an increase in the SPA to 67 between 2034 and 2036, and to 68 between 2044 and 2046, although ongoing Government consideration of the SPA meant that changes to this timetable were always a possibility.
The Chancellor is now proposing that the increase in the SPA to 67 be brought forward to between April 2026 and April 2028. This is in response to forecasts contained in the Office for Budget Responsibility’s fiscal sustainability report that spending on state pensions will increase from 5.5% of GDP in 2015-16 to 7.9% in 2060-61. Bringing forward the increase is expected to save around £60 billion, in real terms, between 2026-27 and 2035-36.
The Government will continue to make changes to the SPA as necessary, based on demographic evidence.
The Department for Work and Pensions has also announced that, for small businesses, the commencement of automatic enrolment of employees into pension schemes has been delayed until May 2015.
In these uncertain times, many people will face the prospect of continuing to work beyond their planned retirement age, and some will be looking to carry on working even after reaching the SPA. Those for whom retirement is still a number of years away can benefit especially from taking action now to build up a fund for their retirement, and to minimise the impact of future changes to the SPA.