State Pension  

Fresh data could push back state pension age rise

Fresh data could push back state pension age rise

A reduction in the rate of improvement in life expectancy has raised hopes the planned state pension age increase to 68 could be pushed back.

According to figures published yesterday (18 June) by the Office for National Statistics (ONS), since the early 2010s there has been “a statistically significant slowdown in the long-term improvement in age-standardised mortality rates for England and Wales”.

This was true for both countries, for both sexes, and for older and younger people, with some variations in the timing and extent of the change in trend, the ONS said.

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Over the last century there has been a long-term trend in falling mortality and rising life expectancy in the UK. However, since 2011 there has been a reduction in the rate of improvement.

Between 2011 to 2013 and 2014 to 2016, only 26 local authorities showed any statistically significant increase in life expectancy for men, and only 17 showed any improvement for women.

This compares to 203 and 128 local authorities respectively showing a significant increase in the equivalent period 10 years earlier.

In July, the Department for Work & Pensions (DWP) decided the increase in the state pension age should be brought forward to 68 between 2037 and 2039 because of increases in life expectancy.

The change will leave 7.6 million people £10,000 worse off, according to analysis by the House of Commons Library.

According to Helen Morrissey, personal finance specialist at Royal London, these figures “add further fuel to the idea that the increases in longevity we have seen for so many years are beginning to slow down, and if this trend continues there will be major implications for policy around state pension age for instance”.

She said: “We have seen steep increases in state pension age in recent years and only last year the government accepted the results of a review which suggested bringing forward state pension age to 68 by 2039 – seven years earlier than currently legislated for.

“If the trends suggested by these figures continue, the government could find itself having to push back a previously announced increase in state pension age.”

Ms Morrissey noted, nevertheless, that the ONS said that the latest figures are in part affected by flu and cold spells, “which is obviously not a solid basis for long term policy making”.

She added: “However, if the figures repeatedly show that something has changed then policy makers need to do more to understand the underlying drivers and their implication for policy making going forward.”

Fiona Tait, technical director at Intelligent Pensions, argued that despite the “evidence that the significant rises in longevity over the last 20 years are beginning to slow down,” there is also “no doubt that the cost to the nation of providing the state pension is still increasing”.

The government will be spending £96.6bn with the state pension in 2018 to 2019, according to the DWP's estimate, 3 per cent more than the forecast value in 2017 to 2018.

Ms Tait said: “The difficulty is that the state pension is a universal benefit and everyone who reaches state pension age, and who has sufficient national insurance credits, will get it.