State pension age increased (again)

20th Jul, 2017

By Robert Little

On 19th July the government announced the state pension age will rise from 67 to 68 sooner than expected, a move which will affect around 6 million people. In this post I explain who this change will affect and why this has happened.

What are the details of this change?

People born between 6th April 1970 and 5th April 1978 were due to reach state pension age (the age at which they are entitled to start receiving the state pension) at age 67. Instead these people will now have to wait a year longer and will reach state pension age at 68. People in other age groups are unaffected – until/unless the government decides to change state pension rules again.

Why has this happened?

Officially this change has come about because people are living longer and can therefore be expected to work for longer. Ultimately this is another cost saving exercise by the government at the expense of future retirees. The government estimates this change will save £74 billion by 2046, which is a not inconsiderable sum. The problem for the government is the state pension is an expensive benefit. This is made worse by the fact that (currently) the government have promised to increase the state pension by the higher of 2.5%, inflation or the increase in average earnings each year. This promise – called the “triple lock guarantee” – was under threat in the Tory party’s election manifesto but it was saved after the Conservatives reached an agreement with the DUP in order to keep it’s majority in the House of Commons.

Is this fair?

This is a highly subjective question. Many people view the state pension as an entitlement (something they feel is promised to them by the government). In reality the state pension is simply a state benefit and this means it can be tinkered with by successive governments in much the same way as Jobseeker’s Allowance and Child Benefit can be changed. Changes to state pension entitlement affect the following categories:

  1. Younger people: from the perspective of younger people (particularly those aged 39 to 47, who are directly affected by this particular change) announcements like this are a concern because they suggest other changes may happen in the future. This makes planning for retirement much more difficult. Also, if people are forced to work for longer (e.g. by pushing back their planned retirement age from 67 to 68 in order to coincide with their new state pension age) it means there will be less work available for future generations.
  2. Less affluent people: for many people the state pension is their only retirement provision, so any alterations to this benefit can significantly change their future. In contrast, someone with a large personal pension or a final salary pension will consider the state pension nothing more than a “top up” and so they are far less affected when state pension rules change.
  3. Those with shorter life expectancies: people who live in certain parts of the country are affected more by changes in state pension age than those who live in other areas. This is because life expectancy in some areas (including the North East) is far lower than in other areas (including London and surrounding areas). A rise in the state pension age means people across the UK will reach their state pension age later but the average person in London will live longer and will therefore receive more money over the course of their lifetime than the average person in the North East.


In summary those who have yet to retire, those with little or no personal pension provision and those who live in areas with a below-average life expectancy will view changes like this as unfair. Those who support the current government’s austerity measures will believe changes like this are necessary to balance the books.

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