The second review of state pension age (SPA) has been launched by the government, which will consider whether the increase to age 68 should be brought forward to 2037-39 from the current plan of a gradual rise to 68 between 2044 and 2046 for those born on or after April 1977. 

The review will consider a wide range of evidence, including life expectancy data, which has been negatively impacted by the coronavirus pandemic. Life expectancy across most regions in the UK slowed for males and females between 2018-2020, according to Office for National Statistics.

Hargreaves Lansdown's Helen Morrissey highlighted the review would also consider other factors that feed into the state pension age debate. "This includes regional differences and should open the debate about healthy life expectancy - the ability to keep working - and how it varies hugely across the country," the senior pensions and retirement analyst said. 

"Someone might have a life expectancy of 80 but not all that time will be in good health and many people will find it impossible to work up to and beyond current state pension age.

"Part of the review will look at changes in life expectancy. While it had been proposed that the increase in state pension age to age 68 should be moved forward to 2037-39 - from 2044-46 - an analysis of the latest life expectancy data as part of this review could stop this in its tracks."

Beyond considering the implications of life expectancy data, the review will:

  • Provide a balanced assessment of the costs of an ageing population and future State Pension expenditure;
  • Consider labour market changes and people's ability and opportunities to work over State Pension age, and;
  • Develop options for setting the legislative timetable for State Pension age that are transparent and fair.

Under consideration will be the enormous ongoing costs of the state pension, which is growing given the recent inflationary surge in the UK. The state pension is set to increase by 3.1% in 2022/23, in line with September's Consumer Prices Index (CPI) inflation figure.

However, UK inflation hit 5.1% in November, its highest in over a decade, which could lead to "a significant squeeze in the living standards of more than twelve million pensioners" without further action by the government, according to Steve Webb, partner at LCP.

"Not only will state pension payments fall in real terms, but income from private pensions will be squeezed, and inflation will eat away at the value of savings held by pensioners in cash ISAs and bank accounts," said Webb, adding: "The Government has shown that it can change Universal Credit rates at short notice when it wants to, and it will now come under pressure to re-think the modest state pension increase it had planned for April 2022."

In addition, the review could prompt an examination of the state pension triple lock, which has been suspended for a year due to government concern that a post-pandemic rise in average earnings would have seen the state pension shoot up by 8%.

Morrissey added: "With a Covid bill to pay the triple lock has come under intense pressure, and earnings data has been abandoned for this year in favour of an inflationary increase. It raises the possibility that this review could prompt a closer look at the triple lock."

A report on the government's review will be published by 7 May 2023.