A new report says that the declining life expectancy should force ministers to abandon plans for raising the age at which state pensions are paid to 20 million workers.
The state’s pension age will increase to 67 over the next five years. And last week, Government officials announced plans for a review to consider forcing millions of workers to delay retiring until they reach 68.
However, new research has shown that the state’s pension age should not be increased to 66 until decades later because there is no increase in life expectancy.
It would mean millions of workers nearing retirement could collect their state pensions a year earlier than expected – but would cost the Treasury close to £200 billion.
The age at which someone can start collecting their state pension, which is currently worth £9,339 a year, is due to rise from 66 to 67 between 2026 and 2028.
The scrapping of current legislation could be an opportunity to retire for millions who were born in the 1960s or 1970s or early 1980s. (file image)
The figure is expected to increase to 68 between 2044-2046, although ministers are keen to move this seven years ahead to 2037-2039.
Lane Clark and Peacock, a retirement consultancy, stated that the predictions for an older population have failed even though they were made before the Covid-19 pandemic.
According to the firm’s analysis, if the Government continues to link the age of state pension to the life expectancy, the rise to 67 could be delayed for 23 years up to 2051.
The reason is that the Government believes retirement should last no longer than one-third of an average lifetime.
According to the study, the increase in the state’s pension age from 67 to 68 is a good idea that should not be implemented until the middle of the 2060s.
For millions of Americans born during the 1960s, 1970s, and 1980s, scrapping existing legislation could be a relief from retirement.
According to Office for National Statistics, a 66 year-old woman could still live until 89. This prediction had fallen to 87 in 2018, however.
LCP’s former pensions minister, Sir Steve Webb said, “The Government’s plans to rapidly increase the state pension age are blown out by this new analysis.
“Even before the epidemic, we almost saw a complete halt to the gains in life expectancy that we’d seen during the past century.
LCP’s former pensions minister, Sir Steve Webb is now a partner. He said, “Government plans to rapidly increase state pension age” have been destroyed by this analysis.
“But the schedule to increase state pension age has not kept pace with this new world.
“This analysis shows the need for urgent revisions to current plans to raise state pension age from 67 to 2028.
Last year, the state’s pension age was only raised to 66. It came after nearly 4 million 1950s-born women missed out on close to £50,000 after their state pension age was increased from 60 to 65, in line with men.
Rebecca O’Connor is the head of savings and pensions at Interactive Investor. She said that forcing people to delay retiring could lead to penalisation for those living in areas with lower life expectancies.
She explained that life expectancy has not increased in recent years. All assumptions upon which these measures rest must be reexamined. It is important to recognize that not everyone can work until the age of state pension.
“Given the experience with the pandemic and the current situation, it is time to review what age entitlements we’re assigning to people, as well as where they are going.
According to a spokesperson for the Department for Work and Pensions, “The State Pension continues to be the foundation for financial security and retirement planning in old age.”
“The review will assess whether rules regarding state pension age were appropriate, on the basis of a variety of evidence such as latest data about life expectancy.