Looks at why and how pension schemes are required to equalise Guaranteed Minimum Pensions (GMPs)
Documents to download
State Pension age review (705 KB , PDF)
How has the State Pension age increased?
From the 1940s until April 2010, State Pension age (SPA) was 60 for women and 65 for men. Legislation to increase SPA was introduced in stages:
- The Pensions Act 1995 included provision to increase the SPA for women from 60 to 65 in stages between April 2010 and 2020, to bring it into line with that for men.
- The Pensions Act 2007 made provision to increase the SPA from 65 to 68 in stages between 2024 and 2046.
- The Pensions Act 2011 brought forward the completion of the increase in women’s SPA to 65 to November 2018, and the increase to 66 for both men and women to October 2020.
- Section 26 of the Pensions Act 2014 brought forward the increase in the SPA for men and women to 67 to between 2026 and 2028.
As a result of these Acts, the current legislated timetable is for the SPA to rise to 67 between 2026 and 2028 and 68 between 2044 and 2046.
Periodic reviews of the SPA
The Pensions Act 2011 accelerated increases to women’s SPA and brought forward the increase in the overall SPA from 65 to 66. These changes gave rise to a campaign against the increase in the SPA for women, with some women born in the 1950s arguing significant changes to their SPA were imposed with a lack of appropriate notification.
To ensure further revisions in life expectancy were taken into account in a timely and transparent way, the Coalition Government legislated for periodic reviews of the SPA. The Government would conduct reviews, informed by a report from an independently led body, and the Government Actuary’s Department (GAD).
The first periodic review (2016-17)
Before the first periodic review, the Coalition Government committed to the “core principle” that people should spend, on average, “up to one third of their adult life drawing a State Pension”. It also committed to providing individuals with at least ten years’ notice for any changes affecting them.
The first independent report was produced by John Cridland, who was also asked to consider wider factors such as variations in life expectancy. His final report, published in March 2017, recommended:
- The SPA should rise to age 68 between 2037 to 2039.
- The SPA should not increase more than one year in any 10-year period, assuming that there are no exceptional changes to the data.
- If additional savings are needed, the triple lock should be withdrawn in the next Parliament.
The rationale for the timing of the proposed increase to 68 was:
- It would keep roughly constant the proportion of adult life spent in retirement with the average over the last ten years (32.87%).
- An earlier increase – for example, between 2028 and 2030 – would be too close to the increase to 67 (between 2026 and 2028). Alternatively leaving the increase to 68 as legislated for in 2007 (between 2044 and 2046) would result in the proportion of adult life in retirement rising to 33.5% which did “not seem prudent in terms of fiscal sustainability”.
To mitigate the impact of a higher SPA on disadvantaged groups, Cridland recommended that the age required to access means-tested Pension Credit should not rise to 68 for those unable to work or with caring responsibilities, and that work-related requirements in Universal Credit should be adjusted for those approaching SPA.
At the same time the Cridland report was published in March 2017, GAD published a report looking at two alternative scenarios: receipt of the State Pension for either 32% or for 33.3% of projected adult life.
Following the Cridland and GAD reports, the Government undertook its own concluding review. On 19 July 2017, then Secretary of State for Work and Pensions, David Gauke, announced the Government would “accept the key recommendation of the Cridland review and increase the state pension age from 67 to 68 over two years from 2037.”
However, in its concluding report in 2017, the Government said that this was a “big decision with significant consequences” and it would therefore carry out a further review before bringing forward the rise in State Pension age to 68. This would allow the Government to consider the latest life expectancy projections and the effects of existing rises in State Pension age.
The second periodic review (2021-23)
On 14 December 2021, the Government launched the second periodic review of the SPA.
Compared to data used in the 2016-17 review, more recent projections have not been as optimistic about improving life expectancy. Some commentators argued that if the Government maintains the principle that people should expect to spend a fixed portion of adult life in receipt of State Pension, planned rises in the SPA should be slowed.
However, in contrast to the first periodic review, the Government did not commit in advance to this principle or to fixed notice periods for SPA changes. The terms of reference for the independent report instead asked the independent reviewer – Baroness Neville-Rolfe – to consider “whether it remains right for there to be a fixed proportion of adult life people should, on average, expect to spend over State Pension age.” The consultation document also asked whether it was “reasonable to give people a fixed period of notice for State Pension age changes, and if so what period.”
The GAD was asked to look at lower proportions of adult life spent in receipt of State Pension than in 2017 – 32%, 31% and 30%. Given “substantial reductions in projected future life expectancies”, only the 30% metric implies accelerating SPA increases from Cridland’s proposals. However, the report pointed to significant uncertainties in predicting life expectancy, particularly as the country emerges from the Covid-19 pandemic.
Baroness Neville-Rolfe concluded in her independent report “that the proportion of adult life metric is still fit for purpose,” and “this proportion should be set at up to 31% of adult life” – reflecting the average experience of those reaching the male SPA between 1996 and 2020.
This metric alone, however, did not to address concerns about affordability and sustainability of the State Pension. The independent reviewer therefore proposed “a limit on State Pension-related expenditure of up to 6% of GDP”. This could be met through changes to SPA, or though changing other policies such as the State Pension triple lock, or by a combination of measures.
Based on the 31% of adult life metric, Baroness Neville-Rolfe concluded:
- The legislated rise in SPA to 67 should continue as planned between 2026 and 2028.
- The SPA should rise to 68 between 2041 and 2043.
Although “no firm recommendation” was made, a 6% of GDP limit on State Pension expenditure implies an increase to 69 between 2046 and 2048, followed by successive increases to 74 by 2067, unless “other tools” are used to limit expenditure growth.
The Government did not adopt the recommendations of the independent report, beyond restating a commitment to the planned increase from 66 to 67 between 2026 and 2028.
Instead, citing uncertainty about life expectancy and other economic factors, a further review was proposed, to report within two years of the beginning of the next Parliament. This review will consider “all options for the rise to the State Pension age from 67 to 68 that meet the 10 years notice period.”
Background on SPA is discussed in more detail in the Library briefing on the State Pension age – background. The Library also has relevant briefings on increases in the State Pension age for women born in the 1950s, and the State Pension triple lock.
Documents to download
State Pension age review (705 KB , PDF)
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