Sunday, December 08, 2013

United Kingdom: Government Announces Acceleration in Increase of Pension Age

In his Autumn 2013 speech to Parliament, the Chancellor of the Exchequer announced, among other things, that the state pension age must continue to track life expectancy. While exact dates are to be determined, increases to pension ages of 68 and 69 would be accelerated. The full statement from the speech follows:
But we also have to guarantee that the basic state pension is affordable in the future, even as people live longer and our society grows older.

The only way to do that is to ensure the pension age keeps track with life expectancy.

The Pensions Bill, currently going through Parliament, puts in place reviews of the pension age every five years.

Now we set the principle that will underpin those reviews.

We think a fair principle is that, as now, people should expect to spend up to a third of their adult life in retirement.

Based on latest life expectancy figures, applying that principle would mean an increase in the state pension age to 68 in the mid 2030s and to 69 in the late 2040s.

The exact dates will be set by the future statutory reviews and in line with the most up to date demographic data, of which the next update is published next week.
A Background Note from the Department of Work and Pensions on the principles underlying this approach states that the United Kingdom "has decided to use the age of 20 as the appropriate starting age for the purpose of calculating the proportion of adult life spent in receipt" of a state pension, and that the government is currently legislating for a review of the pension age to take place once in every Parliament.

Sources: Gov.UK "Chancellor George Osborne's Autumn Statement 2013 speech" (December 5, 2013); Department of Work and Pensions Background Note (December 5, 2013)

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