Raising the State Pension Age to 68

Laura Trott Excerpts

Wednesday 1st February 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Laura Trott)]

I thank my hon. Friend the Member for Amber Valley (Nigel Mills) for raising this important issue, and all the other Members who have contributed to the debate.

The Government remain committed to ensuring that older people can live with the dignity and respect they deserve, and I absolutely reaffirm that the state pension is and will remain the foundation of state support for older people. As has already been pointed out today, changes in the state pension age have been made in a series of Acts by successive Governments from 1995—when the state pension ages of men and women were equalised—onwards, following public consultations and extensive debates in both Houses.

The state pension age is currently 66, and will increase to 67 in 2026-28. As was mentioned by the hon. Member for Reading East (Matt Rodda), Labour legislated for it to increase to 68 in 2044-46, but, following the Cridland review of 2017, the current Government policy is to bring the increase to 68 forward to 2037-39. That is the baseline; we are required under law to review it every six years, and that is what is now being undertaken.

As we heard from my hon. Friend the Member for Amber Valley, the coalition Government of 2010 to 2015 were committed to the “core principle” that people should spend, on average,

“up to one third of their adult life drawing a State Pension.”

They were also committed to giving individuals at least 10 years’ notice of any changes affecting them. The first review of the state pension age following the Pensions Act 2014 was undertaken in 2017, informed by both the Government Actuary’s report and the independent report undertaken by John Cridland. As I have set out, Cridland recommended bringing forward the increase in the state pension age to 68 from 2044 to 2026, as set out in legislation, to 2037 to 2039.

[Sir Stephen Timms]

The two documents from 2017 to which the Minister referred were published four months before the Government’s announcement. Why have the Government not published the documents before their announcement this time around, and will she do so now?

[Laura Trott]

I had a suspicion that the right hon. Gentleman might bring that up. As he rightly pointed out, I have written to him today to explain the rationale behind this, but I will confirm that both documents will be published in full. I look forward to discussing them with his Committee in due course.

[Sir Stephen Timms]

I just want to know why they have not been published. What is the public interest in keeping these things hidden?

[Laura Trott]

As I have said, they will be published in full. On the timing of publication, there is work going on in Government to undertake the review. Once it is finished the documents will be published.

The 2017 review was based on a recommendation to aim for “up to 32%” as the average proportion of adult life spent in receipt of state pension. The review used 2014-based life expectancy data. The Government accepted those recommendations, subject to a further review, before tabling the requisite legislative amendments. The savings from bringing forward this rise to 68 have already been included in published fiscal forecasts.

On 14 December 2021, the Government launched the second periodic review of the state pension age, and work is now under way to complete it, as required by legislation. The review must be published by May 2023, in accordance with section 27 of the Pensions Act 2014. At the autumn statement, the Chancellor committed to concluding the review in early 2023.

As part of the second review, the Secretary of State is considering evidence from two independent reports. The first, a report from the Government Actuary, assesses the latest life expectancy projections from all regions of the UK. There has been a lot of talk about life expectancy today, so I want to put on record the fact that the most recent projections from the Office for National Statistics show a slower rate of improvement in life expectancy than those that informed the Pensions Act 2014 and the Pension Schemes Act 2017. Nevertheless, despite the slower improvement rate, ONS projections continue to show increasing life expectancy over time, and the number of people over state pension age is expected to continue to rise. I can also confirm for the hon. Member for North East Fife (Wendy Chamberlain) that the review will consider the latest recommendations, as well as a wide range of other evidence, before reaching any conclusions about the state pension age.

The second report that will be taken into account is an independent report by Baroness Neville-Rolfe, which will consider recent trends in life expectancy and the range of metrics that we could use when setting the state pension age, including the metrics mentioned by my hon. Friend the Member for Amber Valley. We will publish both documents in full. With respect to the question of whether Baroness Neville-Rolfe will appear before the Select Committee on Work and Pensions, that is a matter for the Committee and for her.

Alongside examining the implications of the latest life expectancy data, the Government review is assessing the costs of an ageing society and future state pension expenditure, as well as considering labour market changes and people’s ability and opportunities to work up to state pension age, bearing in mind recent trends in life expectancy.

My hon. Friend the Member for Amber Valley highlighted the position of those who cannot continue to work. The review will evaluate the impact of previous changes to the state pension age for all individuals, including those with long-term health conditions or disability. The Government continue to provide substantial support for people who are unable to work.

My hon. Friend the Member for Dover (Mrs Elphicke) made some important points about age discrimination. The Government’s business champion for older workers, Andy Briggs, spearheads the Government’s work to promote the benefits of older workers and multigenerational workforces across England, influencing them strategically and by offering practical advice. I will ensure that my hon. Friend’s points about discrimination are passed on to the Department for Business, Energy and Industrial Strategy.

The review will aim to keep the right balance between affordability, sustainability and fairness between generations. The review has not yet concluded—it is very important to emphasise that, given some of the comments today—and I will not pre-empt its outcome. The Government are committed to ensuring that older people have dignity and security in later life, regardless of where in the UK they are living. The Government introduced further targeted support, including cost of living payments of up to £900 for the most vulnerable households and an additional £1 billion, including Barnett impact, to enable the extension of the household support fund in England in the next financial year. Since 2010, the full yearly amount of the basic state pension has risen by over £2,300 in cash terms. That is £790 higher than if it had been uprated by prices, and £945 more than if it had been uprated by earnings. For the first time, from April 2023, the full rate of the new state pension is worth over £10,000 per year.

Automatic enrolment is having a transformational effect on private savings. Over 10.8 million people have been automatically enrolled in a workplace pension, helping to deliver about an additional £33 billion into pension savings in real terms in 2021 compared with 2012. The hon. Member for North East Fife mentioned the PHSO inquiry. She will know that that is ongoing, so it would be inappropriate for me to comment on it until it concludes.

The Government are committed to ensuring that the state pension continues to provide the foundation for people’s retirement income and are proud of the support they have given pensioners since 2010. I welcome today’s debate and thank my hon. Friend the Member for Amber Valley. As I have outlined, the Government take the setting of the state pension age very seriously. I look forward to being able to discuss this matter further—I am sure we will—when the Government finally publish their second review.