The New State Pension Age

The State Pension Age (SPA) is on the move again. On 6 April 2026, it rose one month to 66 years and one month for anyone born between 6 April 1960 and 5 May 1960. That process will continue until 6 March 2028, when anyone born after 5 March 1961 will have a SPA of at least 67.

Not the end of the story

Under existing legislation dating back to 2007, a further phased SPA increase to 68 is due to start in 2044. This has already been subject to a couple of reviews, both of which proposed bringing the date forward, but neither of which received government blessing. A third review began last July and is expected to report later this year.

Whatever that review decides, the next SPA increase will not start before April 2037 because of a government promise to provide a minimum of ten years’ notice of any change.

Money, mortality and morbidity

State Pension spending accounts for 5% of UK GDP, up from 2% in the mid-20th century. Small changes can therefore yield a significant savings to the Exchequer. For example, the OBR reckons that by the early 2070s, three SPA increases (to age 69) will cut annual pension expenditure by about 1% of GDP – about £30bn in today’s terms – compared to holding the SPA at 66.

While those calculations give the government a clear incentive to keep pushing up the SPA, there are obstacles in the way of a march towards an SPA of 70:

• Unsurprisingly, SPA increases are not popular with the electorate. The arguments about the increase in women’s SPAs, which started in 2010, continue to this day. There is a suspicion that the two reviews on the SPA increase to 68 were both put on hold because of impending elections.

• Although life expectancy continues to rise, the pace of increase has been much slower than projected in the early 2010s. In theory, that should imply a less rapid rise in SPA.

• Rising life expectancy has not been matched by a similar increase in healthy life expectancy. The latest data from the Office for National Statistics shows healthy life expectancy falling to its lowest level since 2011-2013.

Making your own retirement date choice

The current State Pension is £241.30 a week (£12,548 a year). If you choose to retire before your SPA, that is an inflation-proofed £1,000+ a month (before tax) of income that you will not receive until you reach SPA.

Covering such a shortfall needs to be planned for. There are a range of ways this can be done, with increasing pension contributions being only one of the possibilities. Which option or combination of options is best will depend on your personal circumstances.

Action

If you do not want the state to decide when you should retire, the sooner you begin planning towards your own retirement date, the better.

The SPA will only ever go up. Talk to us about how to enjoy retirement before 67…or 68…