Pension age should be raised more rapidly


The Emergency Budget included a proposal to raise the state pension age for males from 65 to 66 by 2016. This increases the retirement age significantly earlier than the original schedule. The previous Labour government had planned to increase the male pension age to 66 by 2024 and to 68 by 2048.

Existing legislation is gradually increasing the female retirement age from 60 so it matches the male pension age of 65 by the end of 2020. It is unclear whether the coalition will equalise the male and female pension ages at 66 in the future. 

The first widespread government pension provision was established in 1908 with the Old Age Pensions Act which set the collection age at 70. But this scheme was established at a time when the average manual labourer died by the age of 50 – so relatively little had to be paid out. Later on, though, with the passing of the Contributory Pensions Act of 1925 the collection age was lowered to 65, allowing more people to receive the benefit. This was the last significant change made to the retirement age; with the exception of the 1946 National Insurance Act which lowered the female pension age from 65 to 60. From 1946 to 2010 there were no changes in the pension age. 


Today, not only are people living longer than they were sixty years ago; pensioners now comprise 19% of the population, a larger proportion than the under 16s. This is a problem because sixty years ago when the average male was born, he was expected to live until 63 or so. However, advances in healthcare have allowed people to live – and claim state pensions – for around fifteen years longer.

Providing these prolonged benefits places an enormous strain on the public finances. For example, in 2010 the government will spend £4 billion to support public sector pensions. By 2015, this figure will increase to £10 billon. According to Nick Clegg, the present and rising cost of these pensions is simply “not affordable”. Since 2001 the cost of state pensions has increased by 38%.

The growth in expenditure on pensions is a direct consequence of the widening gap between retirement age and life expectancy. In the context of Britain’s worst ever peacetime fiscal crisis, it is imperative that the government raises the retirement age more rapidly to reflect longer life spans.

8 thoughts on “Pension age should be raised more rapidly”

  1. Posted 01/07/2010 at 12:43 | Permalink

    Ideally, there should be no such thing as a statutory retirement age at all. In a fully capitalised system, a rising life expectancy would lead to rising annuity prices, so people would either have to work longer than originally planned, accept a lower old-age living standard than originally envisaged, or choose some combination of both.
    It would save us the political tug-of-war, because nobody would ‘decide’ that people should work longer. A longer working life would come about as the result of price signals, not political decisions. Going on strike against it would be like going on strike against bad weather.

  2. Posted 01/07/2010 at 13:16 | Permalink

    I often feel like going on strike against the weather, actually.

    No, Anthony is right. In an earlier blog and in other places I have argued for the process of change to begin immediately, with the SPA being raised by three months every year, which is only slightly more than the current annual increase in life expectancy.

  3. Posted 01/07/2010 at 13:24 | Permalink

    Here is the link to Len Shackleton’s blog post on this issue:

  4. Posted 01/07/2010 at 16:38 | Permalink

    But there is no need to have a state retirement pension and therefore a state retirement age.

  5. Posted 02/07/2010 at 08:16 | Permalink

    In another issue. The required years to receive the state pension fell to 25 from 40 should this be raised?

    Any opinions.

  6. Posted 02/07/2010 at 09:34 | Permalink

    I think it fell from 44 (men) and 39 (women) to 30 years for both only very recently, though I don’t quite remember the details of when this happened or what the extra cost was estimated at – a quick google search reveals very little. Philip’s an expert….

  7. Posted 02/07/2010 at 10:04 | Permalink

    @morgan – I would be surprised if reducing the ‘required years’ has made a huge difference. Those not entitled to state pensions would often have been entitled to other benefits such as income support instead. New Labour also introduced an minimum income guarantee for over-60s, whether or not they were state pensioners.

  8. Posted 02/07/2010 at 14:15 | Permalink

    You’re probably right Richard, but this is yet another flaw in the fantasy that employee NICs are a contribution to some fund from which you draw based on what you put in.
    An honest government would scrap them, as they are just another form of income tax. There would be some bureaucratic savings I suppose.

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