Analysis of government documents reveals the DWP are considering a state pension age (SPA) increase.
At the start of November, the Department for Work and Pensions (DWP) commissioned the Government Actuary Department (GAD) to analyse projected life expectancies and requested the figures regarding the number of people spending a third (33.33%) of their adult life in retirement. The DWP also requested the numbers of people spending 32% of their adult life in retirement. But why is this significant?
A Change in Policy
The current policy for setting the state pension age is based around people spending two thirds of their life in work and one third (33.33%) in retirement. The fact the DWP is looking at the 32% figure indicates that they could be considering prolonging the wait for workers reaching state pension age. Steve Webb, former pensions minister and current director of policy at mutual insurer Royal London said:
“If the government is planning to force tens of millions of people to work to 68, 69 or even 70, then it should be transparent about its plans. This would be a huge shift and should be properly debated, not buried in a technical document seen only by specialists”.
Will You Be Affected?
The Guardian looked at what a move to 32% retirement period would mean for current workers waiting to receive state pension:
“People born between March 1962 and April 1972 would see their pension age rise from 67 now to 68. Meanwhile, those born between March 1973 and April 1985 would have a pension age of 69 rather than the present 68. Those born between March 1986 and April 1994 would see their SPA rise from an assumed 69 to 70”.
Triple Lock Reform
It has also been suggested that the government could move to reform the state pension “triple lock” which ensures payments rise in accordance with whichever is highest from average wages, inflation or 2.5%. The DWP rejected this however, saying: “We want to ensure economic security for people at every stage of their life, including retirement. We are committed to the triple lock, which is protecting the incomes of millions of pensioners”. It was also announced that the state pension payouts will rise due to Triple Lock, going up by 2.5%. The full new flat rate state pension will increase to £159.55 a week, and the basic state pension will increase to £122.30 as of next April.
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