2State pension age policy
5.A series of Pensions Acts since 1995 have increased state pension age:
- The Pensions Act 1995 increased state pension age for women from 60 to 65 in stages between May 2010 and March 2020, to bring it into line with that for men. The decision to equalise upwards to 65 (rather than downwards to 60 or at an age in between) was attributed to demographic changes, fiscal pressure and comparisons with both other countries and occupational schemes.8
- The Pensions Act 2007 increased state pension age from 65 to 68 in stages between 2024 and 2046. The Government argued this was necessary owing to “a growing pensioner population resulting from increasing longevity and falling birth rates”.9
- The Pensions Act 2011 accelerated the timetables set in both the 1995 and 2007 Acts, bringing forward equalisation at age 65 to November 2018 and the rise to age 66 to October 2020, on the grounds of increasing life expectancy.10 The Government amended the legislation in its final stages in Parliament to cap the maximum increase in state pension age relative to the timetable in the 1995 Act at 18 months rather than the two years in the original Bill.11
- The Pensions Act 2014 brought forward the increase in state pension age to 67 to between 2026 and 2028.12 In a 2014 speech, the Chancellor of the Exchequer described state pension age increases as the biggest fiscal saving the Government had made.13
- The Pensions Act 2014 also made provision for future periodic reviews of state pension age to consider changes in life expectancy and other relevant factors.14 On 1 March 2016, John Cridland CBE was appointed to lead the first such review. It will not consider the existing timetable to increase the state pension age to 67 by 2028.15 There is a case for it considering differences in life expectancy across the UK and trends in the gap between life expectancy and healthy life expectancy. The Committee will take a keen interest in the review.
Annex 1 details the changes to state pension age for women born in the 1950s. In total across the UK, 1.1 million women born between 6 April 1950 and 5 April 1953 had their state pension age increased as a result of the Pensions Act 1995 alone. A further 2.7 million women have had their state pension age increased by both the Pensions Act 1995 and the Pensions Act 2011.16
Fig 1. Increases in the state pension age for women
6.We strongly support state pension age equalisation and increases in the state pension age as life expectancy rises.
8 Equality in State Pension Age, Cm 2420, December 1993 and HL Deb, 24 January 1995, col. 977. There is a misconception that state pension age equalisation was required under European law. In fact, there was a specific derogation for state pensions in Council Directive (EEC) 79/7 on the progressive implementation of the principle of equal treatment for men and women in matters of social security. Occupational schemes were required to equalise pension ages. It is questionable how long state pension age equalisation could have been resisted in practice. For further detail, see House of Commons Library Research Paper RP 95/47, The Pensions Bill: Social Security Aspects
9 Pensions Act 2007 Explanatory Notes
10 DWP, A sustainable State Pension: when the State Pension age will increase to 66, Cm 7956, November 2010
11 DWP Pension Bill 2011 fact sheet 1 – Government amendment to Clause 1 of Pensions Bill 2011, October 2011
12 Pensions Act 2014, s26
13 Speech by Rt Hon George Osborne MP to the Economic Club of New York, 15 December 2014
© Parliamentary copyright 2015
Prepared 15 March 2016