Policy

Reviewing the State Pension age

Issue

The government wants a regular and more structured way of considering increases to the State Pension age to make sure the State Pension system is affordable in the long term and fair between generations. This will help to share the costs of increasing longevity fairly between the generations. It will also make any future State Pension age changes clearer.

Actions

The government has announced plans to:

  • bring forward the planned increase in State Pension age to 67 (to begin in 2026 and finish in 2028) - we’ve published a timetable of changes to State Pension age
  • introduce a regular and structured method for considering future changes in the State Pension age - the first 5-yearly review will take place in the next Parliament, which begins in 2015

The review of the State Pension age will be based on the principle that people should spend a given proportion of their lives receiving a State Pension and will take into account information from:

  • the analysis by the Government Actuary’s Department of the proportion of adult life individuals in the future can expect to spend in receipt of State Pension
  • an independently-led body, commissioned to produce a report on the wider factors that should be taken into account when setting State Pension age, such as variations in life expectancy

Any future changes to State Pension age will, as now, require primary legislation and will be subject to the full scrutiny of Parliament. The review will seek to give individuals affected by changes to their State Pension age at least 10 years’ notice.

Individuals can use the State Pension age calculator to find out when they will reach State Pension age based on current legislation. This depends on their date of birth and gender.

Autumn Statement 2013 – announcement

On 5 December 2013, as part of the Autumn Statement, the Chancellor announced that the government believes that future changes should be based on the principle that people should expect to spend up to one third of their adult life in receipt of State Pension. This implies that the increase of the State Pension age to 68 would be brought forward to the mid-2030s, and the increase to 69 occur in the late-2040s.

There are no immediate changes to the State Pension age timetable as a result of this announcement. Setting this out now helps provide more clarity over how this government expects future regular reviews of State Pension age to work. This framework means that future governments will keep State Pension age under regular review and will legislate as necessary for any changes.

Background

The Pensions Commission described increases in State Pension age as ‘essential to keep the increase in public expenditure within limits which are fair between generations and sustainable over the long term’. It recommended that the State Pension age should be increased in line with future rises in life expectancy.

As longevity continues to increase, the government believes that there is a strong case for considering changes to State Pension age in a more structured way.

In the 2011 consultation ‘A state pension for the 21st century’ the government sought views on a more systematic framework to consider future increases to State Pension age. In general, there was a high level of support for a more automatic mechanism to manage State Pension age changes. The majority of respondents who addressed the issue favoured some form of review process which would allow changes to the State Pension age to be considered in light of expert advice based upon the most recent data.

In 2011 the government changed the law to bring forward the increase of the State Pension age to 66 so that it will finish by 2020. This was done to make sure that the costs of the State Pension system remain manageable as life expectancy continues to increase.

The Chancellor announced the government’s intention to bring forward the increase in State Pension age to 67 between 2026 and 2028 in his 2011 Autumn Statement. The publication of ‘The single-tier pension: a simple foundation for saving’ in January 2013 confirmed this.

The government has other pension reform policies including:

Welfare reform communications toolkit

Our welfare reform communications toolkit helps explain how DWP is changing the welfare system. It covers:

  • what we are changing
  • why we are making the changes
  • when we are making the changes

Bills and legislation

The Pensions Bill containing provisions for the proposed regular review of the State Pension age and to bring forward the planned increase in the State Pension age to 67 is currently going through Parliament, having been introduced to the House of Commons on 9 May 2013.

The Pensions Act 2011 put into law changes to the timetable for equalising men and women’s State Pension age and increasing the State Pension age to 66.

The Pensions Act 2007 put into law the reforms to the State Pension system set out in ‘Security in retirement: towards a new pension system’ published in May 2006. This included increasing the State Pension age gradually to 68 between 2024 and 2046. We also published background information about the Pensions Act 2007.

The Pensions Act 1995 set the original timetable for equalising men and women’s State Pension age.

Impact

The latest version of the impact assessment for bringing forward the increase in the State Pension to 67 can be found on the Pensions Bill page.

Prior to introduction of the Pensions Bill to Parliament, we published 2 earlier versions of the impact assessment about bringing forward the increase in State Pension age to 67.

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