The Work and Pensions Secretary has announced a review of the state pension age.
The government is required to conduct a review into the state pension age – currently 66 – every six years. The last one concluded in 2023, and the new one announced today is due to finish in 2029.
The review will consider whether the current state pension age is still appropriate, based on factors such as life expectancy.
The announcement comes following warnings from experts that people looking to retire in 2050 are on course to receive £800 per year less than current pensioners.
The Department for Work and Pensions (DWP) said 45% of working-age adults were putting nothing into their pensions, with concerns that the cost of living crisis is preventing people from investing in their retirement.
Liz Kendall said she was “under no illusions” about how difficult it would be to map out plans for pensions for the coming decades, as the cost of living crisis continues to bite.
She said “many workers are more concerned about putting food on the table and keeping a roof over their heads than saving for a retirement that seems a long, long way away”, and that many businesses “face huge challenges in keeping profitable and flexible in an increasingly uncertain world”.
Giving a speech in west London, the work and pensions secretary also announced that she would revive the Pension Commission to consider why future pensioners are on track to be poorer than pensioners now.
“Just because pensioner poverty has fallen does not mean all the problems have gone away,” she said.
“Far from it. Women who are now approaching retirement have half the private pension wealth of men, so the average woman in her late 50s can expect a private pension income of just over £100 a week, compared to £200 a week for men.
“Only one in five of the self-employed are saving into a private pension, down from half in the late 1990s, meaning over 3 million self-employed people aren’t saving anything at all for their retirement.”
The commission, which was first launched in 2002 under Sir Tony Blair’s government, will look at such challenges and consider policy ideas such as lowering the age and earnings threshold at which people are brought into auto enrolment.
Ms Kendall argued that young people in particular were struggling to invest in their retirement because of housing costs.
She said young people ” haven’t got a hope in hell of getting on the housing ladder” and were being “killed by rent” – which she said was driving a “tsunami of pensioner poverty”.
“Put simply, unless we act, tomorrow’s pensioners will be poorer than today’s, because people who are saving aren’t saving enough for their retirement,” she said.
“And crucially, because almost half of the working age population isn’t saving anything for their retirement at all.”
Speaking to reporters after the event, Ms Kendall said the pensions triple lock, the guarantee that the state pension rises in line with average earnings, inflation or 2.5% – whichever is highest – would not be reconsidered.
She said it was “non-negotiable” and “out of scope for this review”.
And asked whether businesses should be prepared to pay higher contributions – on top of the increase in employers’ national insurance contributions that came into effect in April – she replied: “We’ve ruled out any increase in contributions, either from employers or employees this parliament.
“What the commission has been tasked to do is to look to the long term in the middle of this century. How can the state pension and private pensions work together to give people a better income in retirement?”
Reform UK leader Nigel Farage said he believes he UK’s retirement age will “inevitably” have to rise as life expectancy increases.
He was asked at a press conference in Westminster whether he shared the concern that the pensions triple lock was “increasingly unaffordable”.
He replied: “I share the concern with pensions being unaffordable on a national level. I also share the concern at the absolute scandal of the private pensions industry, which has served people terribly but done frightfully well for itself.
“We’re going to have to face the reality that if people are living longer and longer, then inevitably retirement age is going to have to rise.”
The Pension Commission is expected to provide recommendations for how to boost retirement income in 2027.
A Downing Street spokesperson said the review into the state pension age was “routine” and would report back in March 2029.
They said the underlying principle was fixing the retirement savings crisis and helping working-age adults who are not able to save.
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