Having previously been ruled-out, reductions in tax relief for pension contributions are once again being discussed as a possible means of addressing the Chancellor’s Budget deficit.
Also being considered is an increase in the minimum age at which the State pension can be drawn.
The Government currently spends some £100 billion annually on State pensions and pensioner benefits, and this figure will continue to rise as average longevity increases. This year, around 6,000 people are expected to reach the age of 100 and the figure is expected to rise to 56,000 by 2050.
Currently, the State pension age is 65 for men and 63 for women, and this will rise to age 65 for both sexes by 2018, 66 by 2020 and 67 by 2028.
An independent review commissioned by the Government has made three recommendations:
- That the State pension age should increase to 68 by 2039.
- That the “triple lock”, whereby the Government committed to increase State pensions each year by whichever is the highest of the prices index, average earnings and 2.5% should be abandoned and replaced by a link to earnings.
- That exceptions should be made to the higher qualifying ages for people in poor health and those who have had long working lives.
However, a separate report by the Government Actuary’s Department has proposed more drastic cut-backs, which could result in people aged under 30 not being able to access the State pension until the age of 70.
The Government is expected to make known its thinking in May 2017.