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Government delays raising state pension age

The UK government has decided not to bring forward the date when the state pension age is due to rise from 67 to 68.

The change was initially supposed to occur between 2044 and 2046 under the Pensions Act 2007.

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An independent review in 2017 recommended the change be brought forward to between 2037 and 2039, which the government initially accepted.

Now, as reported in Financial Times, the government has accepted recommendations from a second independent review (due to be published in May 2023), which recommends that at least 10 years' notice should be given about an increase in state pension age.

It is now unlikely that the age will change during the 2030s.

Kate Smith, head of pensions at life insurance and pension firm Aegon said that the delay will be a relief to many employees.

Speaking to HR magazine, she said: “Bringing forward the state pension age increase to age 68 earlier than previously planned would have been extremely unpopular. For many, this may be later than when they wish to stop or dial down work, and it isn’t possible to take the pension earlier, unlike private pensions.”

In France, a proposed change to raise the retirement age from 62 to 64 prompted widespread protests and some riots, which may have influenced the government’s change of policy.

According to the Institute for Fiscal Studies (IFS), changes in life expectancy statistics may have factored in the government’s decision.

Under 2006 projections, a man aged 50 would have a life expectancy of 86.3 and a woman would have a life expectancy of 89.3.

Under the most recent projections from 2020, a 50-year-old man’s life expectancy fell to 83.9 and a woman’s fell to 86.7.

According to the IFS, the majority of pensioner households get over half of their income from the state. Therefore, state pension changes without sufficient notice will significantly impact people’s future planning.

Smith added that although these changes are delayed, they are not being scrapped altogether.

She said: “The fact is that many younger employees will have a state pension age of 68, or potentially higher in the future.

“This means having workplace pension savings will be even more important as they give people the flexibility to access their pension earlier, currently from age 55, but increasing to age 57 in 2028.”

Smith recommended employers encourage staff to check their state pension age and national insurance contribution record to ensure that they are on track to receive the full state pension on the government website.