The proposed changes would see the UK mirror Denmark’s approach to retirement
A couple sorting out their finances.(Image: PA Photo/thinkstockphotos)
The government has issued an update on a proposal to increase the UK State Pension age after publishing an open call for evidence ahead of a third review into raising the current threshold.
The Pensions Act 2014 requires the government to review the pension age at least every six years.
The state pension age is currently 66, rising to 67 by 2028 and the government is legally required to periodically review the age.
Ahead of next year’s decision, the Department for Work and Pensions (DWP) has appointed Dr Suzy Morrissey to prepare an independent report.
This report must explore the key factors government should consider in determining the State Pension age for future decades.
These elements include life expectancy, long-term sustainability and the international experience of Automatic Adjustment Mechanisms (AAM).
AAM are rules ensuring that certain characteristics of a pension system respond to demographic, macroeconomic and financial developments, in a predetermined fashion and without the need for additional intervention.
The call for evidence is seeking views on these areas from members of the public.
Dr Morrissey has said she is keen to hear views from a broad range of organisations, experts and individuals, including those who have an interest in the wider social and economic impacts of an ageing society.
Anyone who wants to contribute their thoughts can do so by emailing independent.StatePensionAgeReport@dwp.gov.uk, or by sending a letter to: Caxton House, Tothill Street, London, SW1H 9NA.
The DWP has previously hinted at increasing he current State Pension age to 68 or even 70, a move that would see the UK mirror Denmark’s approach to retirement.
The Scandinavian country recently revealed its intentions to elevate its State Pension age to 70 by 2040 and has linked its official retirement age to life expectancy since 2006 – conducting reviews every five years.
Currently, the Danish retirement age stands at 67 but is scheduled to climb to 68 in 2030 and 69 in 2035.
Those born after December 31, 1970 will face retirement at 70.
Recently, there have been growing concerns over the escalating expense of the triple lock guarantee.
The triple lock guarantee is a UK government policy that ensures state pensions increase by the highest of three figures: average earnings growth, inflation (as measured by the Consumer Price Index or CPI), or 2.5%.
This policy aims to protect pensioners’ income from falling in real terms due to rising costs or stagnant wages.
The Office for Budget Responsibility (OBR) has cautioned that the triple lock is now projected to cost three times the original estimate by 2030, reaching £15.5 billion annually.
While ministers remain dedicated to maintaining the triple lock through the next election, scheduled for 2029, they face mounting pressure to reassess pension strategy and guarantee the system’s long-term viability.