State Pension age – background

Governments in general are anxious to encourage people to work for longer as a way of dealing with the pressure which increased longevity exerts on both state and private pension funding. In its Second Report, published in December 2005, the Pensions Commission proposed improvements in the basic State Pension (including a restoration of the link with earnings) to be paid for in part by an increase in the State Pension Age (SPA). It recommended that over the long term, the SPA should increase broadly in line with life expectancy. The SPA for women was in any case scheduled to increase from 60 to 65 over the period April 2010 to April 2020. In the Pensions Act 2007 the Labour Government legislated to increase the equalised SPA: to 66 over two years starting from April 2024; to 67 over two years starting in April 2034; and to 68 over two years starting in April 2044.

In his Budget on 22 June, Chancellor of the Exchequer, George Osborne, said the Coalition Government intended to accelerate the increase in the SPA to 66. On 20 October, the Government announced that it would speed up the pace of SPA equalisation for women from April 2016 so that women’s SPA reached 65 in November 2018. The SPA would then increase to 66 for both men and women from December 2018 to April 2020. Provisions to implement this were included in the Pensions Bill 2011. However, concern was expressed at the impact of the revised timetable on those women who would see their SPA increase by more than a year (and in some cases by as much as two years) as a result. The Government amended the Bill in its final stages to cap the maximum increase in the SPA at 18 months relative to the legislated timetable. The Pensions Act 2011 received Royal Assent on 3 November 2011. Section 1 brings forward the increase in the SPA to 66 to October 2020.

This note looks at the debate and legislation to increase the State Pension age up until the Pensions Act 2011 received Royal Assent. For further developments, see SN 6546 State Pension age – 2012 onwards