Two new reports published for the government could have far reaching consequences for the younger generation. Their implications are that people aged 30 or under may need to wait until they are 70 to receive the state pension, and see the current “triple lock guarantee” disappearing after 2020.
The first report contains recommendations prepared by the Government Actuary’s Department (GAD); the second was the final report of the Cridland review.
Increase to state pension age
Under the recommendations in the Cridland review, the age that individuals are able to receive their state pension should rise to 68 between 2037 and 2039. This is seven years earlier than is currently planned. Under this proposal anyone under the age of 45 will not qualify for the state pension until they reach 68.
Experts have suggested that this move could have an impact on approximately 5.8 million people who are currently under 45, and who will see the date they receive their state pension pushed back by a year.
In addition, the GAD report suggests that anyone born after 6 April 1986 should not receive their state pension until they are aged 70. This will impact anyone aged 30 or under today. Under this proposal the state pension age will become 70 in 2056.
Under current legislation, the basic state pension rises by the higher of:
- the increase in average earnings; or
However, Mr Cridland’s report recommends that this is removed at the next Parliament.
The government is due to make a final decision based on these reports by May 2017. We will monitor these developments in the coming months.