LONDON (Reuters) - Britain is likely to raise the state pension age to 68 in the mid-2030s, a decade earlier than previously expected, to offset the impact of improving life expectancy, the government said, as it seeks to cut its pension bill.
The change, announced ahead of the government’s Autumn Statement on its economic plans later on Thursday, would affect Britons who are now below the age of 50.
The government has already announced that the state pension age will rise to 66 by 2020 and 67 by 2028 for both sexes, from 65 for men and 60 for women, and those dates will not change, it said.
Bringing forward the increase in the retirement age to 68 would help make the pension system more affordable and make it fairer so people across generations spend, on average, up to one third of their adult lives in retirement, the government said.
“These changes will help ensure the country’s pensions system is affordable well into the future and that we have a sustainable long-term fiscal position,” it said in a statement.
The state pension age had previously been expected to rise to 68 only in 2046.
Under current estimates of life expectancy the pension age is now set to rise again to 69 by the late 2040s, the government said.
“The principle announced today will save around 400 billion pounds, or total savings of over 500 billion pounds once we include the previously announced increases to the state pension age (to 66 and 67),” the government said.
Chancellor George Osborne is expected to announce later on Thursday that he is sticking with his goal to rein in Britain’s budget deficit altogether by 2020, despite a recovering economy which has boosted tax revenues.
Governments across Europe are seeking to stem the soaring cost of universal basic pension provisions - which in Britain is projected to top 8 percent of economic output by 2060, from just under 7 percent now.
In France, President Francois Hollande has announced reform of the country’s indebted pension system but has stopped short of raising the statutory retirement age of 62 years, fearing widespread public opposition.
Germany is gradually raising its state pension age from 65 to 67, although in recent talks on forming a coalition government, Chancellor Angela Merkel’s conservatives agreed to demands from the Social Democrats to allow people with 45 years of contributions to retire early at 63.
The UK government, in an overhaul of the state pension scheme set out earlier this year, has also introduced an “auto-enrolment” scheme for workers in an attempt to get more Britons to start saving for retirement. Under the scheme, employees will be automatically enrolled into their company pension scheme or a state scheme, while having the choice of opting out.
The government has said it will consider at regular intervals whether the state pension age needs to be raised to allow for rising life expectancy.
Exact dates for when the pension age will rise to 68 and 69 will be confirmed at a later date under a government review of the pension age.
Additional reporting by Andrew Osborn; Editing by Mark Potter