The state pension age is already set to increase again from next year
The possibility of the state pension age rising to 69 has edged closer as Labour announces another review of the state pension age. Legislation is already in place for the access age to gradually increase from the current 66 up to 67, between 2026 and 2028.
Labour has now declared that there will be another review of where the state pension age should be set. The last review was conducted by Baroness Neville-Rolfe in 2022.
Mark Pemberthy, benefits consulting leader at consultancy group Gallagher, highlighted that this past review made reference to the potential for further increases to the state pension age. He said: “The previous review of the state pension age in 2022 recommended that, on average, people should expect to receive the state pension for 31% of their adult life, and that the total cost of state pension related expenditure should be limited to 6% of GDP.
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“This review also anticipated a need to increase state pension age to 69 from 2046, although this has not yet been legislated for.” The Government has outlined the key factors that the review will consider, which will include the idea of linking the state pension age to life expectancy and the role of the state pension age in keeping the state pension affordable and sustainable.
However, Mr Pemberthy expressed doubt that there will be significant changes announced around these issues. He explained: “Life expectancy is a complex issue. For decades, life expectancy rose consistently.
“This trend was halted by the COVID-19 pandemic and has stayed lower since – with 2024 life expectancy still lower than in 2019. But the average masks some wide variances based on occupation, gender, geography, and socioeconomics.
“There is significant concern that further increases in state pension age could mean that some population groups do not get much opportunity to enjoy their state pension.” He pointed out some of the issues around attempting to restrict spending on the state pension relative to GDP.
The expert said: “Limiting the cost of state pension as a percentage of GDP is complex and will be dependent on a number of variables including how successful our economy is in the future and also how fast the state pension is increased each year. Currently this is the higher of inflation, earnings or 2.5% [under the triple lock policy] – all of which are significantly higher than our forecast GDP growth over the next few years.
“”The triple lock will not be part of the state pension age review, but must be a consideration in the wider pension review if pensions are going to be sustainable for future generations.” The full new state pension is now worth £230.25 a week, after payment rates rose 4.1 percent in April in line with the triple lock.