Government accused of 'picking the pockets' of millions with state pension move

The state pension age for men and women will rise from 67 to 68

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The Government has been accused of "picking the pockets" of millions of people in their forties after announcing that anyone born between 1970 and 1978 will have to wait for an extra year before receiving their state pension.

The state pension age for men and women will rise from 67 to 68 between 2037 and 2039, seven years earlier than previously planned, in a move designed to save £74 billion by 2045/46, Work and Pensions Secretary David Gauke told the House of Commons.

Mr Gauke said that increases in life expectancy meant that those affected could still expect to receive more over their lifetimes than earlier generations.

But charity Age UK pointed out that his announcement comes just days after former government adviser Sir Michael Marmot warned that the trend towards longer lives was "pretty close to having ground to a halt" since 2010, after rising constantly since the Second World War.

Labour said the change - in line with the recommendations of this year's Cridland Report - would mean 34 million people working longer than they would under its plan to hold the retirement age at 66.

Under current plans, the state pension age for men and women will be equalised at 65 at the end of 2018, before rising to 66 in 2020 and 67 in 2028.

The new change affects anyone born between April 6 1970 and April 5 1978.

The Department for Work and Pensions (DWP) said it would save the equivalent of £400 a year per household.

Mr Gauke told the Commons: "Increases in life expectancy are to be celebrated, and I want to make clear that even (with) the timetable for the rise that I'm announcing today, future pensioners can still expect on average more than 22 years in receipt of the state pension.

"But increasing longevity also presents challenges to the Government.

"There is a balance to be struck between funding of the state pension in years to come whilst also ensuring fairness for future generations of taxpayers."

The DWP said that under the previous timetable, Government spending on the state pension would have risen from 5.2% of GDP now to 6.5% in 2039/40. The new timetable reduces that figure to 6.1%.

Latest projections show that the number of people over state pension age in the UK is expected to grow by a third from 12.4 million to 16.9 million between 2017 and 2042.

In 2015 average life expectancy in Britain was 79.6 years for men and 83.1 years for women, according to the Office for National Statistics.

Shadow work and pensions secretary Debbie Abrahams described Mr Gauke's announcement as "an astonishing continuation of austerity that means 34 million people will work longer than under Labour's plans".

Ms Abrahams said: "The latest research shows that working people in some places will now fall ill 10 years before receiving their state pension under the Tories' new plan - and just days ago, evidence emerged showing that increases in life expectancy are stalling.

"Indeed, most pensioners will now face what has been described as a 'toxic cocktail' of ill health throughout their whole retirement.

"We cannot allow this Government to push people to work longer and longer to pay for its failed austerity agenda."

But the DWP said that keeping the state pension age at 66 would cost more than £250 billion over the period to 2045/46, compared with the Government's plans.

Age UK charity director Caroline Abrahams said: "In bringing forward a rise in state pension age by seven years, the Government is picking the pockets of everyone in their late forties and younger, despite there being no objective case in Age UK's view to support it at this point in time.

"It is astonishing that this is being announced the day after new authoritative research suggested that the long-term improvement in life expectancy is stalling.

"For people in mid-life and younger their state pension may seem a lifetime away but the fact is that the change announced today will have a real impact on them later in life."

Mr Gauke said: "I want Britain to be the best country in the world in which to grow old, where everyone enjoys the dignity and security they deserve in retirement.

"Since 1948 the state pension has been an important part of society, providing financial security to all in later life.

"As life expectancy continues to rise and the number of people in receipt of state pension increases, we need to ensure that we have a fair and sustainable system that is reflective of modern life and protected for future generations."

How we spend our pensions

How we spend our pensions