The state pension age could be increased due to the “pretty hairy” state of the public finances, Mel Stride admitted today. The Work and Pensions Secretary said an ongoing review on the issue would be published within six months.
Mr Stride told MPs on the Work and Pensions Committee that life expectancy, the cost of the state pension and “intergenerational fairness” were all factors being considered.
He said: “I think there are various moving parts in assessing where we should go with the state pension age.
“One of them is life expectancy and more precisely, what proportion of your life should we expect people to have in retirement as opposed to not in retirement?
“Another is the cost, and if you look at the consequences of us living longer, and you look at that, for example, as expressed in the financial stability report that the Office for Budget Responsibility (OBR) produces every year, where it casts out 50 years and says ‘what are the public finances likely to look like given the demographic change that’s going on?’, the cost of pensions being an element within that, it all gets pretty hairy.
“So there is also certainly this other element of what’s the cost going to be?
“I think there are other issues, intergenerational fairness, when you look at the split between how long somebody works to support those that are not working.”
Mr Stride also refused to commit to a previous review of the state pension age in 2017 by former Confederation of British Industry boss John Cridland which suggested that retirement should make up a third of a person’s life.
He said: “You’re ingeniously trying to draw me into where the thinking is going at the moment.
“You’re right the Cridland review was suggesting 32 percent as the ALIR – the percentage of your life in retirement.
“So that is a factor to consider, but I can’t be drawn on what my thoughts are at this stage whether Cridland is about the right figure or not.
“But clearly that metric is a very important metric.”
The state pension age is currently 66 for men and women.
It is due to rise to 67 by 2028 and the Government has previously said it will go up to 68 by 2039.
But there has been speculation that the jump to 68 could be brought forward to as early as 2033.
Earlier this month in his Autumn Statement, Chancellor Jeremy Hunt said the Government’s review of the state pension age would be published early next year.
He also confirmed the triple lock would go ahead in 2023 after the Daily Express campaigned to save the policy as Mr Hunt looked to plug a black hole in the nation’s finances.