State Pension  

Govt seeks evidence on state pension age changes

Govt seeks evidence on state pension age changes

The government is seeking views on the fairness, sustainability and affordability of the state pension system for an independent review being carried out by Baroness Neville-Rolfe.

The call for evidence, published today (February 9), is part of the evidence-gathering stage of Neville-Rolfe’s report, which will itself be used to inform the government’s own state pension age review.

Neville-Rolfe’s report will consider recent trends in life expectancy and the range of metrics the government could use when setting the state pension age.

Neville-Rolfe said: “State Pension age will impact most citizens at some point in their lives and I want as wide a range of people as possible to have the opportunity to contribute.

"I would encourage anyone with an interest to let me have their views on this important subject by responding to the questions set out below.”

The call for evidence is inviting views on intergenerational fairness, asking people to consider how the government ensures the costs of state pension are shared fairly across generations.

It also asks questions about changes in the nature of people's work and what factors they tend to consider when making decisions about when to retire, as well as whether metrics other than life expectancy that should be taken into account when determining state pension age in the future.

The state pension age is currently 66 and two further increases are already set out in legislation, including a gradual rise to 67 for those born on or after April 1960; and a gradual rise to 68 between 2044 and 2046 for those born on or after April 1977.

The Pensions Act 2014 requires the government to regularly review the state pension age, and its latest review must be published by May 7, 2023.

A review in 2017, based on Office for National Statistics population projections using data from 2014, suggested the second rise in state pension age should be brought forward to 2039. 

But the proposals have already attracted criticism, with Steve Webb, partner at LCP, calling for a rethink following estimates that suggested life expectancy was in decline. 

He said the latest evidence showed men and women currently at pension age had a life expectancy two years shorter than previously estimated, and that the full impact of Covid-19 was not yet known.

Life expectancy

Long-term projections still show life expectancy increasing, albeit at a slower rate than previous projections. 

For example, 2014 data suggested a man aged 65 in 2047 was projected to live close to age 90, but 2020 figures put that figure closer to age 87, as set out in the call for evidence.

For women, the projected life expectancy of a 65-year-old in 2047 was 92 years using the 2014-based projections, and 89 years in the recent 2020-based projections.

The number of people of state pension age or over is expected to rise by 24 per cent over the next 25 years, from 12.1mn people in 2022 to 15.1mn in 2047.

The number of people aged 85 or over is expected to double over the same period, from 1.7mn to 3.3mn.