6 million people will now have to work a further year.
The Westminster Government announced on 19 July that it is to increase the pension age to 68, between 2037 to 2039, affecting 6 million people who will now have to work a further year.
The announcement brings forward by 7 years the date of introducing a state pension age of 68, impacting on those born between 6 April 1970 and 5 April 1978. It will have no impact on those born before 5 April 1970, however for those born after 6 April 1978 further increases to their pension age are inevitable based on this latest Government report.
The Government intends legislating for this change in 2023, when the next review of State Pension Age will be completed. A move to 68 will save the Government £74 billion by 2045/46 and see the cost of State Pension provision reduced by 2039/40 from 6.5% to 6.1% of GDP. These savings will be added to as they do not include the cost savings from public service pension schemes that have a link between normal retirement age and state pension age, which is the majority of public service schemes in which NIPSA members are enrolled.
The Government claims that the change is necessary due to continued improvements in life expectancy, but this is not accurate as this week the Marmot Report concluded a significant decrease in life expectancy improvements.
The Government Report clearly signals that age 68 is just a stepping stone to 70+ becoming the pension age. It states the next rise (68) will not bring the preferred percentage (32%) in receipt of state pension to the target and therefore will need to carefully consider when it can be achieved. For those born after 6 April 1978 this could see either a more rapid increase in increasing the age for pension or rather than has been the practice of a 1 year stepped increase using two or more years. The report considers the one year at a time increase to be too restrictive.
As referred to above the increase in the state pension age also impacts on public service pension schemes, as post the Hutton reforms with one or two exceptions public servants age of retirement is linked to the state pension age.
The decision to not bring legislation forward to enact the changes within this Parliament demonstrates yet again the fragility of the current Westminster Government. Members should make it clear to their MP their opposition to the proposed change.
Deputy General Secretary