Review initiated for potential increase in retirement age for state pensions - may quicken in the future?
UK Announces Third State Pension Age Review
The UK government has launched the third State Pension Age Review, aiming to evaluate the appropriateness of current rules regarding the State Pension age. This review, initiated in July 2025, will assess if and how the pensionable age should change based on the latest evidence, particularly concerning life expectancy trends and other relevant factors.
Mandated by the Pensions Act 2014
This review, which occurs every six years by law, follows the first and second reviews that concluded in 2017 and 2023 respectively. The process involves two main independent reports: one led by Dr Suzy Morrissey, analysing specified factors relevant to the pension age review, and another from the Government Actuary’s Department (GAD) providing updated life expectancy projections.
Factors Considered
The review will consider several factors, including life expectancy, fairness between generations, economic sustainability, and alternative policy levers. The link between longevity improvements and appropriate pension age is fundamental, as people live longer, raising the pension age helps maintain system sustainability. The review will also examine how pension age changes impact different age cohorts, ensuring equitable treatment across generations.
An ageing population increases pension costs with fewer working-age taxpayers. The review looks at whether the State Pension age should rise faster or higher to keep pensions affordable in the long term. Additionally, while raising the pension age is one tool, the review will also consider other mechanisms influencing pension affordability, like potential reforms to the "triple lock" guarantee that uprates pensions annually by the highest of inflation, wage growth, or 2.5%.
Current State of Affairs
Currently, the State Pension age is 66 for most people, with plans to increase to 67 between 2026 and 2028 and potentially to 68 later, subject to parliamentary approval and further reviews. The third review will provide the updated evidence base for considering further shifts beyond these planned changes.
Implications for Savers
The review will need to carefully consider the potential impact on millions of savers and the need for reform in the private savings landscape. Not everyone can simply work for longer, and raising the state pension age could disproportionately impact those who are already struggling to save enough and often rely more heavily on the state pension for financial security in retirement.
The state pension triple lock, which guarantees the state pension is uprated annually by inflation, earnings or 2.5% (whichever is highest), is forecast to cost a massive £15.5 billion a year by 2030. The review must also consider how to help people engage with their pension options.
Looking Ahead
The third State Pension Age Review will assess demographic and economic data, guided by actuarial and independent expert reports, to decide if the UK’s State Pension age should be adjusted to reflect changes in life expectancy, intergenerational fairness, and pension system sustainability. The review may suggest further age increases, such as to 69 or even 70.
- The third State Pension Age Review, mandated by the Pensions Act 2014, aims to reassess the appropriate pension age in light of current rules and trends, including life expectancy and economic sustainability, to maintain the system's long-term affordability.
- Personal finance and wealth-management advisors are urged to pay close attention to the review's findings, as changes to the State Pension age could significantly impact the savings and retirement planning strategies of their clients.
- In addition to the State Pension age, the review will also explore other policy options, such as modifications to the "triple lock" guarantee, to ensure pension affordability and stability in the face of increased pension costs due to an ageing population.
- The General News landscape will closely follow the outcomes of the review, as the potential age increases could have important implications for the overall state of public finance and the welfare of millions of retirees in the UK.
