State pension age to rise to 68 earlier than planned

The state pension age will rise from 67 to 68 from 2037, Work and Pensions Secretary David Gauke has announced.

Thursday, 20th July 2017, 3:00 pm
Updated Monday, 11th September 2017, 12:47 pm
The statepension agewill rise from 67 to 68 from 2037

He told MPs the Government was accepting the recommendation made in the Cridland review earlier this year.

This brings the change forward seven years earlier than was initially planned.

The changes will be brought in over two years.

Mr Gauke told the Commons the move would save the Treasury £74 billion by 2045/46 compared with the previous proposals.

The minister said: "As the Cridland Review makes clear, the increases in life expectancy are to be celebrated, and I want to make clear that even the timetable for the rise that I'm announcing today, future pensioners can still expect on average more than 22 years in receipt of the state pension.

"But increasing longevity also presents challenges to the Government.

"There is a balance to be struck between funding of the state pension in years to come whilst also ensuring fairness for future generations of taxpayers."

The number of people over state pension age is expected to grow by a third between 2017 and 2042, from 12.4 million in 2017 to 16.9 million in 2042, according to the Department for Work and Pensions.

Under new plans, the pension age will increase to 68 between 2037 and 2039, earlier than the current legislation which sees a rise between 2044 and 2046.

The change will affect everyone born between April 6 1970 and April 5 1978.

Mr Gauke told MPs: "I want Britain to be the best country in the world in which to grow old, where everyone enjoys the dignity and security they deserve in retirement.

"At the same time we need to ensure that the costs of an ageing population are shared out fairly without placing an unfair tax burden on future generations.

"To deliver this we need to make responsible choices about the state pension age and that is exactly what the Government is doing today."

Shadow pensions secretary Debbie Abrahams condemned the Government's "slash and burn" policies on social security, which she said would hit older people, particularly those facing health problems in later life.

She said: "Most pensioners will now spend their retirement battling a toxic cocktail of ill health, with men expected to drift into ill health at 63 - five years earlier than this proposed quickened state pension age of 68 - while women expect to see signs of ill health at 64."

Ms Abrahams also pressed the minister on whether the move would impact on the Government's alliance with the Democratic Unionist Party (DUP), which promised to protect older people in its election manifesto.

She said: "The Government talks about making Britain fairer but their pensions policy, whether it's about the injustice our 1950s-born women are facing or today's proposal to increase the SPA to 68, is anything but fair."

Mr Gauke said Labour's call to fix the state pension age was "reckless, short-sighted and irresponsible" in the face of an ageing population, adding £250 billion to national debt.

He said: "When the evidence in front of us shows that life expectancy will continue to increase a little over one year every eight years that pass, fixing the state pension ageat 66, as advocated by the party opposite, demonstrates a complete failure to appreciate the situation in front of us."

The Government currently spends 5.2% of GDP on the state pension, which would rise to 6.5% of GDP by 2039/40 without any action.

The changes reduce this to 6.1% of GDP by 2039/40 - saving each household £400, based on the number of households today, and in total saving £74 billion by 2045/46.

Tory former work and pensions secretary Iain Duncan Smith said the move would prevent future generations from being saddled with debt.

Quoting the Cridland report, which suggested keeping the pension age would add £250 billion to the national debt, he said: "That is not just a figure. It is a figure that will be borne by future generations as they have to pay excessive monies.

"Considering that the Labour Party at the last election promised to get rid of the student debt and now renege on that, doesn't he think they will be doing the same very shortly on this one?"

Mr Gauke replied: "You are absolutely right to highlight the irresponsibility of the position that the Labour Party had at the last election.

"Just as they have walked away from the deeply irresponsible position on student debt, I hope they will walk away from the deeply irresponsible position on the state pension age."

SNP economy spokeswoman Kirsty Blackman condemned the move and suggested the Government had delayed publication until after the election to avoid losing "even more seats".

She said: "We continue to call for an independent savings and pension commission.

"We believe the Government is not doing enough to recognise the demographic difference across the United Kingdom and an independent review would take those into account."

Mr Gauke sidestepped the calls for an independent review and suggested that the Scottish Government could decide on whether it wanted to offer something different north of the border.

Responding to the statement in the House of Lords, Conservative former Treasury minister Baroness Neville-Rolfe argued the administration should have gone further.

The former Tesco executive said: "Why isn't the Government going faster and bringing these changes in more quickly and perhaps going further up the age range?"

Work and pensions minister Baroness Buscombe said: "There's no question that we should keep the whole issue of age and the state pension age under review."

But Labour former minister Lord Boateng said: "I really don't see what there is to celebrate if you are old and poor and doing a manual job.

"It's perfectly true that life expectancy is increasing, but it isn't getting easier to get older.

"I think what is lacking from the statement and the Government's response is any sense of justice around the process of being old and poor and disabled or a carer."

But Lady Buscombe said: "I have to say I entirely disagree."

She said she found references made by Labour to older people as "shocking" as if they were "somehow rather useless and worn out".

The minister added: "The welfare system provides a safety net for those experiencing hardship with a range of benefits tailored to individual circumstances.

"The Government is committed to supporting the vulnerable spending around £50 billion a year on benefits to support disabled people and people with health conditions, which equates to over 6% of all government spending.

"There's been substantial improvements in life expectancy at 65 across all socio-economic groups over the last 30 years. This means change is needed for fairness between the generations."