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Mar 30, 2023
UK Delays Decision on When to Raise State Pension Age to 68
(Bloomberg) -- The UK government delayed a decision on when it will increase the state pension age to 68 amid slowing rises in life expectancy.
A new independent review recommended putting off the rise to between 2041 and 2043, but Work and Pensions Secretary Mel Stride told the House of Commons on Thursday that now was not the time to take a decision. He said a fresh review will be undertaken within two years of the next general election.
“Given the level of uncertainty about the data on life expectancy, labor markets and the public finances and the significance of these decisions on the lives of millions of people, I am mindful that a different decision might be more appropriate once these factors are clearer,” he said.
The UK state pension age — currently 66 — is legally set to rise to 67 between 2026 and 2028, and was also due to increase to 68 between 2044 and 2046. An independent review in 2017 said that change should be made earlier — from 2037 to 2039 — a recommendation the government accepted at the time.
But Stride said that since 2017, the increase in life expectancy had slowed — a trend “seen to a varying degree across much of the developed world.”
His announcement effectively kicks the can down the road, deferring a potentially unpopular decision until after an election that’s widely expected next year. Proposals to raise the state pension age are highly controversial, particularly among middle-age voters, as demonstrated in France where Emmanuel Macron’s attempt to push through a rise triggered nationwide protests.
Still, putting off the increase to 68 will come at a high price for the UK: the Institute for Fiscal Studies said last week that each year of delay after 2037 will cost the Treasury as much as £9 billion ($11 billion).
The state pension is paid to those who reach the eligible age and have made enough National Insurance contributions. It will be worth £203.85 a week from April 6 for those on the “new state pension” and £156.20 for those on the “basic state pension.”
©2023 Bloomberg L.P.
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