Articles - Government to reassess the State Pension age

 By James Jones-Tinsley, Self-Invested Pensions Technical Specialist, Barnett Waddingham

 While a further rise to 68 is currently legislated for 2044–2046, this third review may propose advancing that change to an earlier date.What will the review cover?

 The review will provide two reports, which will cover:

 Using ONS 2022 cohort life expectancy projections, GAD will analyse historic patterns (1992–2016, 2004–2024, and 1992–2024) and project outcomes from 2030 to 2072. This evidence base will inform whether the SPa rise to 68 in 2044 to 2046, as legislated in the Pensions Act 2007, remains viable, or whether a revised schedule is needed. If the desired proportion of retirement life is projected to be exceeded within the next two years, the GAD model proposes a two-year phased SPa increase.

 What’s the timeline?
 There is no confirmed deadline for publication, but findings from both reports will be submitted to the Secretary of State for Work and Pensions in time to inform the next policy cycle.

 The timing and form of any changes will be decided by the Secretary of State, and final implementation would be subject to legislation. Advisers and Paraplanners should watch closely for announcements in late 2025 or early 2026, when decisions are expected to be made, based on the evidence gathered. The current legislated increase to age 67 remains on track for 2026 to 2028.

 Key concerns
 The financial sustainability of the State Pension system is the main concern. As the Treasury’s largest single welfare expenditure, it accounts for more than 80% of the £175bn annual pensioner welfare bill. Without reform, this cost is projected to grow from 5.2% to nearly 8% of GDP over the next 50 years. Given these pressures, policymakers are re-evaluating not just the pace of future SPa increases, but the underlying principles for determining those changes.

 The last review in 2023, led by Baroness Neville-Rolfe, recommended bringing forward the rise in SPa to 68 between 2041 and 2043. The then-Conservative Government chose not to adopt this proposal, likely due to its political sensitivity ahead of elections. The new Labour Government, however, may revisit the recommendation to signal its commitment to long-term fiscal responsibility.

 The Adam Smith Institute (ASI) said that, despite Government measures such as raising employers' National Insurance (NI) contributions from April 2025, their latest prediction is only one year later than its previous estimate calculated last year.

 Maxwell Marlow, Director of Public Affairs at the ASI, said: “If the Government is serious about securing Britain’s finances, it must suspend the triple lock immediately and move towards a system that is honest about the challenge posed by an ageing population.”

 What are the implications for Financial Advisers (FA) and Paraplanners?
 Accelerated SPa increases are likely: Given demographic pressures and fiscal constraints, the acceleration of the rise to 68 - possibly to 2041 to 2043 – is under active consideration. Further rises beyond 68 may also be explored, particularly if longevity improvements rebound after recent slowdowns.

 Review frameworks may shift: The use of fixed percentages of adult life in retirement as an SPa benchmark may lead to a more dynamic system in the future, particularly if the UK adopts mechanisms akin to international AAMs.

 The future of the triple lock is in question: While this review focuses on SPa, policymakers may also consider the viability of maintaining the triple lock, as part of a broader effort to manage state pension expenditure.

 Pro-active client communication and retirement planning is a must: Advisers should proactively communicate with clients, especially those born after 1961, about the potential for revised retirement timelines. Expectations around retirement age and income should remain flexible in financial plans.

 Intergenerational equity may need consideration: The review will pay close attention to fairness across generations, which may influence not only SPa policy, but also broader pension reform. Advisers and Paraplanners may need to consider how different cohorts are impacted, particularly younger clients who may face longer working lives or changes to state support.

 Monitor long-term planning: With the GAD extending their projections to 2072, Advisers and Paraplanners should monitor the final review outcomes closely, to align long-term models with realistic assumptions around SPa and related benefits.

 Consider regional variations: The review will include data divided up into separate regions and nations. Any divergences in regional impacts may prompt policy adjustments, or the segmentation of advice, depending on client location.

 Preparing for the shift
 The third SPa review reinforces the Government’s intent to align retirement policy with long-term demographic and fiscal realities. While no immediate changes have been legislated beyond 2028, a faster transition to an SPa of 68 is probable, and future dynamic adjustments may become the norm.

 FAs and paraplanners should factor these trends into client retirement strategies and stay alert to further reform across both SPa and State Pension value frameworks.