The Department for Work and Pensions (DWP) has confirmed plans to increase the State Pension age to 67 in 2026, progressing from the current age of 66. By 2028, this change will be fully implemented for both men and women. Additionally, there are indications that the age may rise further to 68 between 2044 and 2046, reflecting ongoing demographic and economic pressures.
This adjustment follows a trend of increasing life expectancy and an ageing population, which have resulted in escalating costs associated with state pensions. Currently, the annual expenditure on state pensions exceeds £175 billion, with projections suggesting that costs could reach nearly 8% of GDP over the next 50 years, compared to 5.2% today.
Individuals affected by the change will receive personalized notifications from the DWP, ensuring they are informed of their eligibility. The adjustments stem from the Pensions Act 2014, which not only raised the State Pension age but also modified its phasing schedule. Consequently, individuals born between March 6, 1961, and April 5, 1977, will qualify for the State Pension upon reaching 67 years of age.
At a recent event, Labour Party Chancellor Rachel Reeves emphasized the necessity of a review into the State Pension age, suggesting that further increases may be essential for the system’s sustainability and affordability. A government review is scheduled to report in March 2029, with Reeves stating that it is prudent to reassess the pension age as life expectancy continues to rise.
In the financial sector, Rachel Vahey, head of public policy at AJ Bell, noted the planned increase to age 68 in 2046 but highlighted that a more rapid adjustment could be forthcoming. The previous two reviews of the State Pension age recommended accelerating the increase, though subsequent governments have approached the matter cautiously. Vahey remarked, “This latest state pension age review may eventually force the government’s hand.”
As the DWP prepares for these significant changes, the implications for future retirees remain a critical concern, prompting ongoing discussions about the balance between fiscal responsibility and support for an ageing population.
