Britons will have to work longer before claiming the state pension under government plans to save billions of pounds by raising the official retirement age to 68 earlier than originally planned.
The current threshold of 66 will rise to 67 in 2028 and is set to reach 68 in 2046. However, ministers are considering bringing the changes back as early as 2035, which would affect those aged 54 and under today.
Jeremy Hunt is expected to announce this year. The Sun, which first reported the Whitehall discussions, said the chancellor was in favor of raising the pension age to 68 in the mid-2030s, but Mel Stride, the work and pensions secretary, was pushing for 2042.
Last month, the government launched a review of the state pension age, the results of which will be published in May. Ministers believe the changes are needed to make pensions affordable for taxpayers in an aging population. The latest rise has saved the Treasury around £5bn.
Critics said the move would disrupt the plans of those already planning to retire and could alienate voters in the next election.
In 2018, the retirement age for men and women was 65. By 2028, it will gradually increase to 67 years. Under current law, he would reach age 68 by 2046, although state policy calls for that to happen by 2039. Ministers want to leave at least ten years between any changes and their implementation, so 68 could be the retirement age as early as 2033.
Raising the state pension age will save the Treasury billions of pounds. Taking the level to 68 a year earlier would save taxpayers around £10bn, according to analysis by pensions experts. LCP, the pensions consultancy, estimated that around £8bn would be saved in state pensions and at least £1.3bn would be raised in extra earnings tax.
The move comes after Britain’s biggest stockbroker estimated that only one in three high earners with a household income above £100,000 could afford a comfortable retirement lifestyle.
Fewer than one in seven households are on track to afford a comfortable lifestyle in retirement, according to Hargreaves Lansdown, Britain’s biggest broker. Even for households earning £100,000 a year, this figure is one in three.
A comfortable retirement is defined by the Pensions and Lifetime Savings Association, the industry body, as requiring an annual income of £54,500 for a couple. This covers two overseas holidays a year and up to £1,300 per person on clothing.