The age we can officially retire and receive State Pension benefits may need to rise further than planned, according to a Government-commissioned review.
The age at which you can receive your State Pension is already increasing and will be 67 for both men and women by 2028.
It will then rise again to 68 by 2046. But, the age could change again.
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“The future of the State Pension age is a hugely important issue for this country. It must be fair and sustainable, and reflect changes in society,” says John Cridland, the former head of business organisation the CBI, who is leading the first regular review of the State Pension age for the Government.
“If any changes are to be made to State Pension age, additional support may be required to mitigate the impact on the seriously affected groups…and smooth their transition between work and retirement,” says Cridland.
These suggestions include early access for several reasons:
1. Long working life
If you started work at 16 and have paid National Insurance for 50 years you could be allowed to access your State Pension early, at the age of 66.
2. Short life expectancy
Variations in when you can access your State Pension based on different life expectancies around the country and manual jobs that carry an increased risk of dying young.
3. Reduced payouts
People could be allowed to access their pension earlier if they accept a smaller income. For example, you could start receiving your State Pension at 62 but receive a lower payout for the rest of your life.
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The comments from Cridland come at a time when there is increased pressure on the Government to tackle the growing cost of the State Pension. Several pension experts are calling for the triple lock system to be abandoned in order to prevent pension benefits rising excessively.
“The State Pension, in its current format, is unsustainable,” says Patrick Connolly, a certified financial planner at Chase de Vere. “We have an aging population which means there are an increasing number of people claiming the State Pension with comparatively less working people paying taxes to meet these claims.
“The only practical solutions seem to be further increases in the State Pension age, reducing State Pension benefits, the State Pension becoming means-tested, or a combination of these.
"These aren’t necessarily palatable outcomes, but the reality is that we cannot rely on the state, or in most cases our employers, to provide us with the retirement that we hope for. We have to take responsibility for ourselves.”
However, not everyone agrees with the suggestions made in the report. At a time when the State Pension has just been through major changes former Minister of State for Pensions, Steve Webb, has called for the Government to keep things simple.
“Just at the point that the State Pension is moving to a simpler flat rate system it is not time to complicate matters by having different pension ages for different people,” says Webb, now director of policy at Royal London.
“It is true that people in different parts of the country and different occupations may have lower life expectancy and poorer health outcomes. But the right response to this is to tackle those health inequalities at source rather than to use the blunt instrument of the State Pension to solve these wider social and economic problems.”
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