Government confirms review of state pension age

The government has today launched the third review of state pension age.

First announced in July, the review will consider whether the rules around pensionable age are appropriate, based on the latest life expectancy data and other evidence.

The government is set to begin its latest review of the state pension age earlier than expected, despite a legal requirement to undertake such assessments only once every six years. The most recent review was completed in 2023.

Dr Suzy Morrissey has been appointed by the Department for Work and Pensions Secretary of State to prepare an independent report ahead of the review.

This independent report must explore the key factors government should consider in determining state pension age for future decades. This includes:

- the merits of linking state pension age to life expectancy.
- the role of state pension age in managing the long-term sustainability of the state pension.
- the international experience of automatic adjustment mechanisms for making decisions about state pension age.

The current legislated timetable is for state pension age to rise to 67 between 2026 and 2028 and 68 between 2044 and 2046.

The government noted that the number of people aged 85 years and over is expected to increase by 189% over the next 50 years, rising from 1.8 million people in 2025 to 5.1 million by 2075.

DWP estimates show that forecast expenditure on the state pension in 2025/26 is £146 billion. In nominal terms, this has increased by 63% over the past 10 years and 183% over the past 20 years. Accounting for inflation, spend on the state pension has increased by 19% over the past 10 years and 70% over the past 20 years. 

By 2029/30, DWP forecast expenditure on the state pension to be £169 billion in nominal terms (£157 billion in 2025/26 prices). This is an increase of 16% in comparison to 2025/26, and an increase of 8% when accounting for inflation.

Dr Suzy Morrissey is keen to hear views from a broad range of organisations, experts and individuals. 

In her Call for Evidence, questions include:

Life expectancy

What are the advantages and disadvantages of linking state pension age to life expectancy?

How would linking state pension age to life expectancy impact upon intergenerational fairness?

Sustainability

What role, if any, should state pension age have for managing the cost of the state pension in the longer term?

What are the advantages and disadvantages of using state pension age to manage the cost of the state pension in the longer term?

What other factors relating to sustainability should the Government consider when determining state pension age? What are the advantages and disadvantages of using these factors?

Automatic adjustment mechanisms

What are the advantages and disadvantages of using automatic adjustment mechanisms to make changes to state pension age (i.e. if a certain factor changes, state pension age is automatically increased or decreased as a result).

What factors could be considered for use in an automatic adjustment mechanism, and why?

Factors for setting state pension age

What other factors do you think the government should consider when making decisions regarding state pension age? What are the advantages and disadvantages of using these factors?

Which of these factors (life expectancy, sustainability and other factors) do you think are most important for the Government to consider when making decisions regarding state pension age, and why?

How might changes to state pension age impact people differently? Which groups of people, regions or nations may be most impacted by changes to the state pension age, and why?

Stephen Lowe, group communications director at retirement specialist Just Group, commented: “As a result of rising longevity and dropping birth-rates, it is estimated that a quarter of the UK’s population will be aged 65 or older by 2050. This means that the burden of funding the state pension will fall on a shrinking proportion of working people. 

“If the government wants to avoid increasing taxes or means-testing the state pension then it may have to look at options either to increase the age at which people receive the state pension or to moderate the amount paid. 

“Neither of these are political vote winners – and as we have seen with the winter fuel and disability payments, once a benefit is introduced it becomes extremely difficult to reduce or withdraw that support. If the government does bring in changes to the state pension – either to the amount or the age at which it is paid – then it makes sense for people who are not yet receiving it to build up some resilience against those changes. 

“This is important because more than four in ten of current recipients tell us the state pension accounts for the majority of their income and there is a significant proportion wholly reliant on it. Our own research also shows that more than six in 10 (62%) retire before they start receiving the state pension, sometimes due to redundancy or ill-health. So, if the Government either limits the amount paid or pushes out the age at which the state pension Age can be claimed, then some people will face a wider financial gap than they planned and will need to cover it from their own resources. 

“One of the best ways for individuals who are not yet in receipt of the state pension to prepare for this possibility is to build up private pensions and saving. The additional income required on top of the state pension to reach an acceptable minimum living standard – or even a moderate income in retirement – will be achievable for many people. The latest PLSA Retirement Living Standards show a couple where both are receiving the full state pension will already meet the minimum income threshold. To bump that up to the PLSA’s moderate retirement living standard, they would need to create around £20,000 additional income per year combined, on top of the current full state pension."

David Pye, client consulting director at Broadstone, added: “The launch of the state pension age review is a critical step in laying out the long-term future of this hugely important core benefit for retirees to aid their individual planning and cashflow modelling that many now undertake.

“With an ageing population, previous governments have almost exclusively used an increasing state pension age to control costs - especially at a time of creaking public finances. But it will be interesting to see if the final report recommends anything different especially as life expectancy plateaus and our health landscape changes.

“If the state pension age is increased or the amount provided is reduced or means-tested, it will only re-iterate the need for urgent reform in the private savings landscape to ensure adequate incomes at retirement.”