Personal Account

Once there was good reason to increase the state pension age – now it’s completely unjustifiable

My mother hit the state pension age at 60 years and nine months; for Dad it was 65. Me? According to the Government’s official website, I’ll finally be able to buy a few state-funded pints of ale at 68 in November 2055.

Yes, there are 30-odd years between us, but it is astonishing that I’ll be waiting nearly eight and three years longer, respectively, than my parents. To qualify for the full pension, which in April will be worth £10,600 a year, I will need to have an impeccable 35-year National Insurance record.

Under the “old” state pension my parents receive only 30 years are needed for the full “basic” amount.

The rises in the pension age between their generation and my own were inevitable. Life expectancy increased steadily over the 20th century but while Britain’s fertility rate soared to a high point in the mid-1960s, it rapidly fell afterwards – accelerated by the 1968 Abortion Act – and hit a record low during the pandemic.

Taken together, that means a rapidly shrinking workforce paying for an enormous retired population. Something had to give. Women gradually lost their five-year retirement head start and now everyone’s state pension age is rising towards 67 by 2028 and 68 by 2039.

But as we explain in today’s cover story, Jeremy Hunt, the Chancellor, is rumoured to want to speed up the charge to 68. Just weeks after confirming the benefit will rise by a record 10pc next year under the triple lock, this is a typically sneaky way of clawing back future costs. Just as he has frozen various tax-free allowances to ensnare extra receipts when wages rise, bringing forward a rise in the pension age is a way of improving the state’s bank balance without most people realising.

As with Mr Hunt’s “fiscal drag” trickery, delaying pension payments for millions of people is all about reassuring financial markets that the Government has a credible strategy for controlling its soaring costs. Come the next election, voters will be reminded how the Conservatives handed a record pay increase to pensioners. But, make no mistake, even small changes to the state pension age make a huge difference.

A 12-month delay might not sound like a lot, but for millions of people in their 50s the lost income is likely to be more than £10,000 each.

There are other consequences. The minimum age you can withdraw money tax-free from a private pension is currently 55. But this has historically been pegged to be 10 years before the state pension age, and will rise to 57 when the state pension age reaches 67.

Unless you’re French, it makes complete sense to increase the pension age when there’s an ageing population with a dwindling workforce.

But we are no longer living longer. Recent mortality data from the Office for National Statistics shows the improvements of the 20th century have disappeared. In 2020 the ONS found both men and women at 65 were living two years fewer than expected just six years earlier. That is before you factor in the pandemic.

If Mr Hunt is going to withhold our pensions, he needs evidence that it is fair. It is not our fault the Government’s spending is out of control.

A 12-month delay might not sound like a lot, but for millions the lost income is £10,000 each