Almost nine million workers will be forced to wait longer for their state pension if the Government increases the retirement age to 68 in the mid-2030s.
The state pension age is currently set at 66 and is in the process of rising to 67. It is legislated to rise again to 68 between 2044 and 2046, but ministers are considering plans to accelerate this by around a decade.
This will hit around 8.5 million workers approaching retirement, according to estimates from the pension specialist Just Group.
Accelerating the increase in the state pension age would affect around 910,000 people each year, it found.
While the state pension age is scheduled to rise in the 2044 to 2046 window, the Government wants this to happen by 2039. Industry experts have speculated that Chancellor Jeremy Hunt could announce an even earlier timetable, between 2034 and 2036, in the Budget next week.
Stephen Lowe, of Just Group, said: “Increasing the state pension age forces a radical shift in people’s retirement planning. It means people face a fundamental choice of financing an extra year before they receive their state pension, which is the bedrock of retirement income for many people, or working longer.”
Mr Lowe added: “It is vital the government supports any change in the state pension age with a comprehensive and effective communications campaign. We’ve seen in the recent past what serious difficulties it can cause people if they are not aware of a change to their own state pension age.”
A generation of women born in the 1950s were forced to wait an extra six years for their state pension after legislation was tweaked, giving rise to the Waspi – Women Against State Pension Inequality – campaign.
In the past, increasing the state pension age has also deepend social inequality across the country. The last increase disproportionately affected elderly workers in the poorest areas of Britain, according to research from the Institute for Fiscal Studies, a think tank.
This is because they are less likely to have sufficient private savings and therefore have no choice but to work for longer while they wait to receive the state pension. When the state pension age increased from 65 to 66, one in seven 65-year-olds were pushed into income poverty as a result, the IFS estimated.
However, pressure is growing on the Government to control state pension spending. Retirees will get the biggest pay rise on record in April, when the full new state pension will rise by 10.1pc to £10,600 per year. Pensioner benefits accounted for 10.4pc of total public spending in the 2022/23 tax year, or 5.5pc of gross domestic product, according to the Office for Budget Responsibility.