State pension age could rise to 68 earlier than planned forcing millions to work longer | Personal Finance | Finance
The age at which Britons receive their state pension is set to increase to 67 by 2028 and 68 by 2039. However, according to a report by the Telegraph, Government ministers want to pull that forward to the mid 2030’s. The Telegraph reported that it had spoken to half a dozen current and former government figures involved in discussions in recent months about speeding up the pension age increase.
These sources told the newspaper that the move was “widely favoured” by both current and former government figures.
It is understood that ministers want to leave at least 10 years between the time that the policy decision is legislated and when it takes effect.
That means it could take effect as early as 2033.
The move would mean that people currently in their mid-50s would have to wait a year longer than expected before receiving their state pension.
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While no final decisions have been made, it was revealed by the Chancellor in the Autumn Statement that a review of the state pension age will be published early next year.
The state pension plan comes as part of cost-saving measures for the Treasury and could help raise tens of billions of pounds for the Government department.
The Government also says as the number of people over the state pension age increases, they need to make decisions on how it manages its costs.
According to an analysis from pension consultancy firm LCP around £10billion could be saved by moving the state pension age to 68.
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The firm estimated that around £8 billion would be saved in state pension payments and a further £1.3billion could be made in taxes on extra earnings.
Sir Steve Webb, a partner at LCP told the Telegraph that it is “tempting” for the Government to see increases in state pension ages as “easy money”.
However, he noted that an “aggressive schedule” of pension age rises was “simply not justified” based on the latest evidence of life expectancies.
Mr Webb warned that if the pension age was hiked, then the Government could risk seeing thousands of older Britons relying on benefits as their health is not good enough for them to continue working.
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Currently, Britons are able to access their state pension when they are 66 years old.
A Department for Work and Pensions (DWP) spokesman said: “No decision has been taken on changes to the state pension age.
“The Government is required by law to regularly review the state pension age and the second state pension age review is currently considering, based on a wide range of evidence including latest life expectancy data and two independent reports, whether the rules around state pension age remain appropriate.
“The review will be published in early 2023.”
To be eligible to claim the new full state pension, a person must have contributed 35 years’ worth of qualifying National Insurance payments.
The full new state pension is currently £181.15 a week, whilst the lower basic rate state pension is currently £141.85 a week.
Next year, the state pension payments will increase with inflation with payments going up by 10.1 percent.
In April, those claiming the new state pension will receive £203.85 a week whilst those on the basic state pension will get £156.20.
