Pensions Minister Torsten Bell has acknowledged that the government may need to rethink state pension age hikes due to slowing life expectancy growth.
At we reported earlier today, Bell noted that the rise in longevity is not as rapid as previously anticipated.
Latest figures from the Office for National Statistics (ONS) back this up.
Between 2021 and 2023, life expectancy at birth for men in England fell by 26 weeks, from 79.5 years to 79 years. For women, it dropped by 13 weeks, from 83.2 years to 83 years.
These figures compare to the pre-pandemic period of 2017 to 2019. So that’s quite a rapid falling away.
On the surface, this might sound like a reason to delay pension age hikes. After all, if people aren’t living as long as projected, why should they have to wait longer to receive their pensions?
But dig deeper into Bell’s comments, and it becomes clear this isn’t the reprieve we might have hoped for.
They reveal that the Department for Work and Pensions and the Treasury both continue to watch life expectancy numbers avidly.
This confirms an uncomfortable truth: the state pension age will still have to rise over time, whether we like it or not.
Politicians know this too. They’re just too scared to tell us.
Britain has botched its state pension system. Contrary to popular belief, there’s no pot of money sitting around, ready to pay your pension.
There never was. Governments gave up on that idea decades ago.
Instead, today’s workers fund today’s state pensions from today’s taxes.
But with people living longer and having fewer children, the ratio of workers to pensioners is shifting in a dangerous direction.
In 2020, every 1,000 people of working age supported 280 pensioners.
By 2070, the same number will have to support 393 pensioners. That’s an unsustainable burden.
That’s why the state pension age has been rising and will continue to do so.
The government maintains that people should spend no more than a third of their adult life in retirement.
That principle underpins the planned increase of the state pension age from 66 to 67 between 2026 and 2028.
Under the Pensions Act 2007, it is set to rise to 68 between 2044 and 2046, though there have been calls to bring that forward.
The pandemic temporarily slowed life expectancy trends, but Covid is over.
Which means life expectancy is likely to resume its upward climb, and pension age hikes will continue as planned.
However, there’s a wildcard.
The UK population is increasingly unhealthy, with rising obesity and related health issues. So we could start dying sooner, easing the need for state pension hikes.
It’s not exactly a dream scenario, though.
Even if that happens, don’t expect a major victory. The Treasury is desperate to rein back state pension costs.
It will throw a party if any politician is brave enough to scrap the triple lock.
Even if the pension age doesn’t rise as quickly as some feared, it’s almost certainly not going to come down.
Anyone hoping for an earlier retirement funded by the state is likely to be disappointed.
The Treasury has two ways of making the state pension add up. Either hike the state pension age, or scrap the triple lock.
And you know what it would really like to do? Both. We need to remain vigilant on this.
