THE rise in state pension age to 67 is a “bitter blow” for those approaching retirement, charities have warned.
The Government has confirmed it will increase the state pension by £5.30 to £107.45 next year, in line with the “triple lock” policy, which guarantees that state pensions will be increased each year by average earnings growth, inflation or 2.5 per cent, whichever is higher.
The state pension will increase in line with consumer price index (CPI) inflation, which hit 5.2 per cent in September.
However in his Autumn Statement, Chancellor George Osborne also outlined plans to raise the state pension age to 67 between April 2026 and April 2028 in response to people living longer. The measure is expected to save around £60bn in today’s prices between 2026-27 and 2035-36, and will prolong the working lives of millions of people.
Michelle Mitchell, charity director for Age UK, said: “The decision to speed up the timetable to increase the state pension age to 67 will come as a bitter blow to many people fast approaching retirement, especially those in ill-health, caring for relatives and those out of work.”
Minister for Pensions Steve Webb has said time-scales set by the previous Labour administration, under which the pension age was to be increased to 67 in 2036, were “too slow”, and argued more drastic action needed to be taken to avoid a major pensions crisis as life expectancy rises.
The current weekly state pension is £102.15 for those who qualify through national insurance contributions, and pension credit will increase by £5.35 a week.
Saga director general Ros Altmann said that while the ‘triple lock’ has been fully honoured, there was nothing in the statement to help suffering savers, who have seen their living costs soar while struggling to get a real return on their savings as the Bank of England maintains a historic 0.5 per cent base rate.
But she admitted the announcement that the state pension age will increase to 67 starting from 2026 is broadly in line with other nations.
Dr Altmann said: “Around that time, the US, Netherlands, Germany, Denmark and Spain will all be increasing pension ages to 67 and Ireland’s pension age will be 68. It also does give people around 15 years’ notice, which is fair.
“However it is really quite scandalous that the Government refused to use some of the money saved to delay the original rise to age 66 that has just been passed into law.”