The Government says that longer life expectancy and a growing population are pushing up State Pension costs and it needs to act now to keep a lid on the money needed to fund the State Pension.

The move could mean bringing forward the rise in the age at which people become eligible for the state pension to 68 (from the current age of 66) to 2037-39. Under current plans a gradual rise to age 68 is only planned between 2044 and 2046. 

The move, if implemented, would mean that millions would have to wait longer for a full State Pension.

The Government says the The Pensions Act 2014 requires it to regularly review State Pension age. The Government review will conclude in May 2023.

The State Pension age is currently 66 and two further increases are currently due. These will mean a gradual rise to 67 for those born on or after April 1960 and a gradual rise to 68 between 2044 and 2046 for those born on or after April 1977. 

The first Review of State Pension age was carried out in 2017 and concluded that the next Review should consider whether the increase to age 68 should be brought forward to 2037-39 before tabling any changes to legislation.

In a statement on the new Review the government said: “As the number of people over State Pension age increases, due to a growing population and people on average living longer, the government needs to make sure that decisions on how to manage its costs are, robust, fair and transparent for taxpayers now and in the future. 

“It must also ensure that as the population becomes older, the State Pension continues to provide the foundation for retirement planning and financial security.”

The Review will looks at the implications of the latest life expectancy data, assess the costs of an ageing population and future State Pension expenditure, consider labour market changes and people’s ability and opportunities to work over State Pension age. It will also develop options for setting the legislative timetable for State Pension age that are “transparent and fair,” the Government says.

The Secretary of State is commissioning two independent reports for the Review from the Government Actuary and a report on other factors affecting State Pension age led by Baroness Neville-Rolfe.

Consumer investment platform Interactive Investor said a rise to 68 from 2037 would affect people born from the early 1970s onwards, rather than those born since the late 1970s, potentially pushing full retirement back for millions more people. 

Becky O’Connor, head of pensions and savings, Interactive Investor, said: “Millions more people could face having to work for longer before they get their state pension as a result of this review. The idea of a long, enjoyable retirement seems set to be consigned to the history books. 

“Many will have spent much of their working life expecting to retire at 65. They have been disappointed before and look set to be disappointed again. It’s no wonder today’s younger workers have little faith in the state pension being there for them at all when they stop work, with many thinking they’ll end up working forever. Continually moving the goalposts back like this doesn’t just provoke disillusionment, it has big implications for retirement planning.”