Where next for State Pension Age?
Pensions & benefits Mortality, longevity and demographic modelling Policy & regulation
Stuart McDonald
Partner & Head of Longevity and Demographic Insights
Steve Webb
Partner
Clodagh Howe
Consultant
Jonny Duggan
Associate Consultant
Experts at LCP have proposed major changes to the State Pension system, designed to make it more sustainable while ensuring it remains fair for those with lower life expectancy.
Despite huge improvements in life expectancy throughout the twentieth century, the State Pension Age (SPA) has been slow to adapt. Pension age was set at 65 in the mid-1920s (and lowered for women in the early 1940s), but then remained unchanged for decades while longevity rose sharply.
In this paper, LCP takes a look at how government policy on the SPA has evolved and the changes that could be implemented.
LCP's key proposals include:
- Setting the State Pension Age so that people can expect to get a pension for 20 years on average. Under this policy, future increases in life expectancy feed through 100% into the size of the working-age population, making the system more sustainable.
- Introducing a new “guaranteed period” for the State Pension of five years, ensuring, for the first time, that everyone who reaches State Pension Age will get something back for their contributions. This provides protection to those with lower life expectancy as the State Pension Age increases.
LCP’s recommendations have been fed into the Government’s review of the State Pension Age.
