State Pension age rise to 70 'inevitable' as 'difficult' decision looms

The State Pension age could reach 70 sooner than expected

The State Pension age is due to set to steadily increase and could reach 70 earlier than forecasted. The rise from 66 to 67 is expected to take place within the next few years, using a phased approach.

The rise to age 67 will be the second in decades after the legislation revamp under the Pensions Act 2011 - where the State Pension age for men and women was levelled out at 65 and gradually increased from there.

But initial predictions on when this process needed to be implemented may need to be streamlined. This is due to the cost of living crisis and an ever-increasing life expectancy which could put unbearable strain on the State Pension system.

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The rise from 67 to 68 was initially only due to occur between 2044 and 2046. But reports from the International Longevity Centre earlier this year indicated that the State Pension age will need to be 70 or even 71 by 2050.

Experts at Fidelity highlighted that these rises are inevitable - and have been since the State Pension was introduced in 1909 when the eligibility age was 70 but average life expectancy was 52. Trying to make the system stay in line with life expectancy figures, while also not getting left behind by inflation, is a costly effort for the Government.

The report warned that the younger generation, who are most likely to be impacted by the rise to 70 years, hold less wealth, savings and investments than their elders. But predictions and expectations on when the State Pension age will change have notoriously fluctuated.

For example, a 2017 parliamentary review recommended moving the rise to 68 almost a decade earlier between 2037 and 2039. But, a 2022 review suggested State Pension age should hit 68 by 2043 instead and rise to 60 by 2048, instead of stagnating for a few years like its predecessors.

At the time, the Government delayed the decision. Fidelity experts warned that it will be a 'difficult balance to strike' as they try to keep spending on State Pension below 6 per cent of the country’s GDP.

By 2071 it’s expected to sit at 8.1 per cent if it continues on current trends. Experts highlighted that there are only a handful of ways to mitigate this.

These would be raising state pension age, slowing the annual increase in state pension sums or increasing the number of qualifying years needed to be eligible. The pension experts said the best way to 'take control of your own pension age' is to start investing in your pension pot as early as possible so the reinvestment and compounding interest have time to live up to their full potential.