The state pension age may be rising faster than our life expectancy

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New research shows that the state pension age may be increasing too quickly. The state pension age is rising to 66 by 2020 and 67 by 2028. Further rises are planned.

Q. What does the research say?

A. The research was carried out by a respected pensions organisation called the Pensions Policy Institute (PPI). The government says that it plans to increase the state pension age further so that people spend a third of their life receiving the state pension. However, the PPI says that the government is basing these planned increases on calculations carried out in 2010 showing how our life expectancy was likely to increase.

The problem is that our life expectancy does not seem to be increasing at the rates calculated in 2010. Calculations done in 2010 show life expectancy increasing at a faster rate than those done in 2012 and 2014.

KEY POINT: The PPI says that by using calculations done in 2010, the state pension age is likely to increase to 68 seven years earlier than if the government had used calculations done in 2014.

Q. Aren’t we all living longer?

A. No, we’re not. And this is a key point. Although we’re living longer in terms of the population as a whole, the gap between those who are living the longest and those who are not living so long is widening.

The PPI also says that the government works out the state pension age rises using an average – which is affected by very high life expectancies. This means that in a year when the state pension age rises, fewer than 50% of people reaching state pension age that year will spend a third of their life receiving the state pension.

The PPI says that if the government chose to calculate it using the median so that in any year 50% of those receiving the state pension had it for a third of their life and 50% for less, the state pension age would rise more slowly. This is important because, although women still tend to live longer than men, women in certain parts of the UK and women who’ve done stressful or very physical jobs will have a shorter life expectancy than those living in the most affluent areas and/or who’ve had a less stressful work life.

Q. Who will lose out?

A. The Pensions Policy Institute says that those from poorer backgrounds, ethnic minorities and people living in certain areas will get their state pension for a shorter time and are less likely to be able to work up until their state pension age. It says that one solution could be to give people earlier access to their state pension or benefits.

Related articles:

10 things you need to know about the new state pension from April 2016

History of the state pension; 10 things you need to know about how it affects women