Before Parliament closed for its summer recess, the UK government announced there will be another review of the State Pension Age (SPA), which was last reviewed in 2023.
After being forced to make a U-turn on means-testing winter fuel payments, while standing firm against compensation demands from the Women Against State Pension Inequality (WASPI), the government most likely was not happy about the requirement to review the SPA again.
The news that the Department for Work and Pensions (DWP) will be undertaking two new SPA reviews was somewhat overshadowed by other statements, such as the relaunching of the Pensions Commission.
However, this SPA review will significantly impact individual and government finances.
Here’s what you should know about the current State Pension situation.
SPA increases in 2026 and 2044
After increasing from 65 years old in 2018–2020, the State Pension Age is now 66 years old for both men and women. From next April, this will gradually increase to 67 years old by April 2028.
While the first SPA review in 2017 suggested that it should rise to 68 years old in 2037–2039, the second review in 2022 proposed this should take place later in 2041–2043.
However, under current plans, the increase to 68 will be phased in from April 2044–2046.
These reviews prompted the government to complete another review before making a final decision about this. In any case, any changes to the SPA will have 10 years’ notice.
Will the SPA go up in 2037?
It seems unlikely that the original proposal to increase the SPA to 68 in 2037–2039 will go ahead, not least because this would be difficult to legislate with a 10-year notice period.
UK life expectancy projections have also fallen since the first review, giving more reasons to delay further SPA increases. At the time, it was predicted that a man and woman aged 68 in 2037 would live another 21.1 years and 23 years respectively, but the latest figures suggest 18.4 years and 20.9 years.
This decrease in life expectancy should lead to abandoning the SPA increase to 68 years old, but as this could save billions annually, the government is likely to push in the other direction.
Need advice on pension savings?
You can check your State Pension Age and State Pension forecast on the government website.
If your current age means that your retirement planning will be affected by future SPA increases, then it’s a good idea to review your own private pension savings, as well.
With nearly half of working-age adults in the UK not saving enough for their private pensions, more workers should consider consulting accountants for pension advice.
For example, we have a friendly team of experienced Barnsley accountants here at gbac, who can help you with planning retirement savings in the most tax-efficient way for your situation.
To find out more, call us on 01226 298 298, or email us at info@gbac.co.uk and we’ll be in touch soon.