I am glad former Pensions Minister Baroness Ros Altmann has warned of the potentially huge damage to pension planning a new government move on State Pension Age, literally slipped in to an OBR report, could cause.
A recent OBR report said that the government was considering bringing forward the rise in the State Pension Age (SPA) to 68 by seven years from 2044 to 2037.
The report said this change was already in the pipeline although the government has yet to confirm it formally.
The move would mean the already planned rise in the SPA to 68, instead of taking place in 2044, would happen in just over 10 years time, seven years earlier than planned.
Now, increasing the SPA to 68 is a serious concern in itself but has been planned in for many years. I’m sure it will have been factored into financial plans already. Bringing forward the date however will just exacerbate the challenges and force a rewriting of pension plans.
The problem is that the public finances are in a poor state and the government needs to cut the welfare and benefit bill - who better to target than pensioners in their late sixties?
It’s worth considering the potential impact of all this because it sounds superficially like a modest change.
Many with poor or no private pensions would need to consider working to age 68 rather than 67 to receive the full State Pension. If they started work at 16 and continued to work until 68 they would have contributed to 52 years of National Insurance to ‘earn’ their State Pension, far more than the 35 actually needed, yet no-one can opt out of NI.
A bigger issue is Health Life Expectancy (HLE). This is now only just over 60 on average for men and women in the UK and has recently slipped backwards. In some of the poorer areas of the country it’s only just over age 50 so some people in poor health could have to look after themselves for nearly 20 years before the State Pension kicks in.
A separate, more baffling issue, is that the State Pension is currently under review by the Pensions Commission which is taking a long, hard look at the State Pension and how it interacts with other pensions. It therefore seems a strange time to announce a major shift in SPA while pensions are still being reviewed.
All these things may become clearer in time but we are facing an era when the State Pension is being pushed back further and further on the horizon for many and that’s neither fair or just.
With longer waits for the State Pension it is highly likely that millions will never see it. That cannot be right.
• Our latest issue of Financial Planning Today magazine is out now and features the findings of our exclusive Annual Reader Survey. To learn more about subscribing and receive unlimited access to our website content click here: Financial Planning Today Registration
Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and daily news. This topical comment appears most weeks, usually on Fridays but occasionally other days. Email: