State pension age rise ‘to be scrapped’ but ‘not for the right reasons’ | Personal Finance | Finance

A plan to bring forward a rise in the state pension age has been scrapped according to the latest reports. The state pension age is currently 66, but two further increases to 67 and subsequently 68 have already been planned.

Reports previously suggested the Government wanted to bring forward a rise to 68 from 2044 to between 2037 and 2039.

However, the Financial Times said the decision will now be pushed beyond next year’s election, according to officials.

The newspaper suggested a state pension age hike could have provoked a backlash from middle-aged voters the Government was keen to avoid.

The speculated motivation behind the decision has not been met with positive sentiment.

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Dr Carole Easton, OBE, chief executive at the Centre for Ageing Better, welcomed a pause to state pension hikes, but said this was “not for the right reasons”.

She explained: “This decision should not be delayed or pushed into the long grass because it might prove unpopular.

“Instead, the Government should be focussing on what is fair to employees who will be most immediately affected by any change while balancing the needs of employers and the UK economy more broadly in our ageing society.”

Dr Carole stated she is not “ideologically opposed” to further increases in the state pension age.

However, she urged the Government to avoid rushing these plans, or implementing them before “other vital employment reform”.

She continued: “Research we carried out with the IFS shows the number of 65-year -olds living in absolute poverty more than doubled in the two years after the process to increase the state pension age to 66 began.

“The most recent increase in the state pension age also created a significant increase in the number of people working at 65 – to the financial benefit of those individuals.

“Those who are in a position to continue working are earning additional income, boosting their pension pots, and making a valuable contribution to workplaces and the UK economy.

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“But the majority of people are not in work at this age.”

Dr Carole expressed her concerns about pensioner poverty, and people working for longer – into their mid-60s.

She suggested for this option to be feasible, there would need to be more targeted employment support, flexible working and carers leave.

The expert added: “Any further changes to the state pension age need to be introduced gradually and with plenty of advanced notice. People need significant time to plan for their retirement.

“Any moves to further increase the state pension age must be accompanied by a holistic review of how our social security system supports us as we age.

“This should assess the impact of tapered access to state pension age benefits for those who cannot work in the years leading up to retirement.”

A DWP spokesperson previously told no decision has yet been taken on changes to the state pension age.

They said: “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.”