The Department for Work and Pensions (DWP) is likely to accelerate the planned rise of the state pension age to 68 in response to falling healthy life expectancy in the UK. New research reveals that people in the UK are spending fewer years in good health compared to a decade ago, raising concerns that the nation’s overall health is deteriorating, unlike improvements seen in countries like Japan, Norway, and Spain.
According to an in-depth analysis by the Health Foundation thinktank, healthy life expectancy for men in the UK has dropped from 62.9 years between 2012 and 2014 to 60.7 years in 2022-24. For women, it has fallen from 63.7 to 60.9 years over the same period.
Currently, the Labour government has set plans to increase the state pension age to 67 by 2028, followed by a further rise to 68 by 2046 for individuals born after 1961. However, experts warn that this timeline could be expedited due to worsening health trends.
READ MORE: DWP State Pension Age Rise Sparks Fairness Debate Amid Declining UK Healthy Life Expectancy
Sarah Coles, head of personal finance at AJ Bell, highlights the implications of this shift: “Healthy life expectancy has decreased by two years in a decade, and if this trend continues, an increasing number of people will face financial shortfalls in retirement. While the state pension age is scheduled to rise to 68 by 2046, the government may bring this forward.”
She advises individuals to reassess their retirement plans to prepare for potential changes. “Many currently depend on the state pension in their financial planning. It’s important to consider how you would manage your finances if the pension age increases sooner than expected,” Ms. Coles explains.
To mitigate risks, she recommends revisiting pension contributions to build a larger retirement fund capable of supporting a higher income in the early years post-retirement. The sooner planning begins, the better the chances of covering any gaps.
Ms. Coles also emphasizes the importance of income protection insurance as a safeguard against illness or injury that forces early exit from the workforce. “Consider the duration and terms of coverage, whether it protects you if you cannot perform your current job or if you are unable to work at all. Though income protection insurance can be costly, it offers valuable financial security.”
For those nearing retirement, Ms. Coles stresses that it’s not too late to enhance savings and recommends having a backup plan. This might include downsizing property, leveraging other assets for income, or increasing emergency funds to cover unexpected expenses until state pension benefits begin.
As health outcomes continue to influence retirement policy, proactive financial planning remains essential to ensure a secure and comfortable retirement, regardless of changes in pension age.