State Pension age is currently 66 for both men and women, but is set to increase to age 67 from 2026 to 2028. This increase affects anyone born after April 1960.
A further increase, to age 68, is currently scheduled from 2044 to 2046, affecting people born after April 1977.
From the 1940s until 2010, State Pension age was set at 65 for men and 60 for women, but as life expectancy has increased, the age at which the State Pension becomes payable has also had to increase.
The process for deciding State Pension age
A previous idea to automatically link the pension ages to life expectancy was dropped a decade ago. Instead, it was decided that independent reviews would be held each parliament and make recommendations, with the government offering a response the following year. The whole process is underpinned by some broadly agreed aims:
• That a third of adult life should be spent in retirement.
• That State Pension costs should not exceed 6% of GDP.
• People should be told 10 years in advance of any changes.
Reviews were subsequently held in 2017 and 2022. The 2017 review suggested the rise to age 68 should be brought forward to 2037 to 2039, but the subsequent 2022 review recommended the increase be delayed to 2041 to 2043. This would affect anyone born after April 1974.
The Conservative government at that time acknowledged the recommendations, but delayed any decision, promising to hold another review within two years of the next parliament.
The “triple lock”
The ‘triple lock’ is a further complication. It guarantees a minimum rise of 2.5% each year or the higher of inflation or wages. As a result, State Pension payments have grown relatively quickly over the past decade. The bulge in Baby Boomers reaching retirement further increases the cost pressure.
The Office for Budget Responsibility expects the cost of the State Pension as a percentage of GDP to rise from 4.8% to 8.1% by 2071.
The primary ways to mitigate this are either slower rises in the State Pension, which would involve watering down or abandoning the triple lock, or to increase the age of State Pension eligibility.
What does this mean for your retirement plans?
If you are currently aged 57 or above, it is very unlikely that your current state pension age (66 to 67) will change. You can check your state pension age at https://www.gov.uk/state-pension-age/y/age.
For those in their early to mid-50s, State Pension age is currently 67, but you should be mindful that this could increase.
If you were born after April 1974 but before April 1977 (currently in your late 40s or just turned 50), it may be safer to assume that your state pension age will increase to 68 (or somewhere between 67 and 68).
For those born between April 1977 and April 1979, already impacted by the scheduled increase to age 68, it is reasonable to assume that this will be your state pension age.
For anyone younger than their mid-40s, it may be better to assume a state pension age of 69 or even 70.
It is worth noting that public sector pension schemes now generally align their retirement age with State Pension age, although older pension benefits may still be payable from age 60 or 65.
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