Increase of the State Pension age to 68 delayed

Decision on raising the State Pension age not expected until after the general election

The government has decided that their planned State Pension age increase to 68 will not be brought forward yet. 

The news has no doubt brought relief to thousands of people born in the late 1960s and early 1970s. As things stand, those born on or after 5 April 1977 will remain as the first cohort of people expected to work to 68.

To help you understand the planned increases and why they are happening, we have put the following together to explain everything you need to know about the changes:

• Why is the State Pension age increase not being brought forward?
• Will the State Pension age increase affect me?
• Why is the State Pension age gradually rising?
• The State Pension age timeline.
• How much is the State Pension?
• Plan ahead for your retirement,

Why is the State Pension age increase not being brought forward?

The last Labour Government’s Pensions Act 2007 decreed that the state pension age will rise from 67 to 68 between 2044 and 2046. 

A later independent review in 2017 put forward that the rise to the State Pension age should be phased in sooner, between 2037-2039. This would see people born in the late 1960s and early 1970s pulled into the later retirement cohort.

In response to the recommendation, the work and pensions secretary said any changes to the planned State Pension age wouldn’t take place until another review is carried out. 

In March 2023, the government conducted another periodic State Pension age review based on two reports that were commissioned. One piece of key information from the review reveals that life expectancy for retiring Britons is now almost three years lower than what was projected in 2017. 

Life expectancy and other demographic data is very important to decisions made regarding the State Pension age. As a result of this and other findings from the review, a decision is now expected in 2026 following a further review and the next general election. 

Will I be affected by the State Pension age increase?

From 2044, the State Pension age increase to 68 will affect people born after 5th April 1977.

There is an increase happening sooner than this, however, when the State Pension age will rise from 66 to 67 from May 2026. This will affect people born on or after 6 April 1960.

To check what age you can expect to start receiving the State Pension, enter your date of birth into the government State Pension age calculator.

Why is the State Pension age gradually rising?

Due to longer life expectancies and an increasingly ageing population, more people than ever before are claiming the State Pension. By increasing the age at which people qualify for the State Pension, the Government can try to manage the steadily increasing cost to taxpayers.

To put it into perspective, the number of people claiming the State Pension has risen from 5.9 million in 1962 to 12.5 million at the start of 2022 – that’s more than double. In terms of costs to the State, it’s around £110 billion in this tax year alone.

Despite a slight drop in recent projections, life expectancies have risen significantly over the last few decades. This is thanks to advancements in healthcare, improved working conditions and a greater awareness of the importance of a healthy diet and lifestyle.

According to the Office for National Statistics, average life expectancy in the UK rose to 79 for men and nearly 83 for women between 2018 and 2020. They were 71 for men and 77 for women between 1980 to 1982 – a significant jump.

And then there’s the issue of the UK’s ageing population to consider. This causes problems as there’s a greater proportion of the country claiming the State Pension, versus a progressively smaller number of younger, working-age people who pay for it through their taxes.

The State Pension age timeline

Here’s a timeline of how the increases to the State Pension age have gradually crept up since the system as we know it was introduced in the 1940s.

1940s: The State Pension age was initially 65 for men and 60 for women. 

2018: Both men and women now have an equal state pension age of 65.

October 2020: The state pension age climbs to 66, resulting in approximately 55,000 more 65-year-olds in employment.

May 2026: The State Pension age will increase to 67 but the rise will be gradual over two years until March 2028.

2044: The age is set to rise again to 68, affecting people born after April 1977.

How much is the State Pension?

How much State Pension you will receive depends on how many national insurance contributions (NICs) you have made.

To qualify for any State Pension, you will need to have ten qualifying years of NICs on your record. To receive the full State Pension you will need to have at least 35 full years of NICs, which is currently £203.85 per week.

You can check how much State Pension you can expect to receive by requesting a State Pension Forecast on the Government website.

Plan ahead for your retirement

If you are looking into your own retirement finance options, one option could be an equity release plan, which thousands of UK homeowners aged 55+ arrange every year. 

Equity release allows you to unlock a tax-free cash lump sum from your home’s value, without any mandatory monthly repayments to make.

A plan could help you to bridge the gap between your retirement and when your pension income begins, for instance. Or, you could use a plan to clear your outstanding mortgage to enjoy a bigger disposable income in later life.

Call our friendly team today to get in touch with one of our selected equity release specialists. They’ll be able to explain everything to you and tell you how much you could unlock from your home. 

Simply call us on 0808 178 3055 or request a call back for a time that suits you, and we’ll arrange an appointment. Alternatively, check your eligibility and get an initial indication of how much tax-free cash you could unlock.

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn