Increases to the state pension age means approximately 670,000 people each year will have to wait longer before benefiting, while the government could save £11bn a year in this time, according to analysis from Aegon.
This saving could therefore be used to fund the promised increased spending on the NHS and social care, as we face an ageing population.
The state pension age for men has been 65 since 1925, and it became 65 for women from 6 November 2018. However, just one month later, starting in December 2018 and spread over the course of 48 months, it will gradually increase for both men and women to age 66. Starting in December 2028, the state pension age will again increase to 67.
Since 1925, life expectancy has increased drastically, with men expected to live for an additional 18.32 years once reaching 65, whereas it was just 11.3 years back then, according to figures from the Office for National Statistics. Life expectancy increased further for women, who were expected to live for a further 13.07 years in 1925, compared to 20.88 years today.
As people are living longer, state pensions are paid over a longer period and to more people, therefore costing more. State pensions do not have a specific fund and are instead paid from National Insurance contributions paid by today’s workers, so the government has justified increasing the state pension age to keep it affordable.
The full amount of the new state pension is currently £164.35 per week, or £8,546 per year. However, only those that have contributed towards National Insurance for 35 years receive this, while others who have entitlements to a previous earnings related state pension may be entitled to more.
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