Overview
- Former pensions minister Sir Steve Webb and consultancy LCP propose guaranteeing at least five years of state pension payments, with any unpaid balance going to heirs if a claimant dies early.
- The plan pairs the guarantee with a gradual increase in the state pension age by one year every decade to deliver an average retirement of about 20 years.
- LCP says the guarantee’s cost would be modest because most people live at least five years after reaching eligibility, and it models the approach on annuity market practice.
- The government’s third review of the state pension age, launched last month, is considering life expectancy, labour market conditions, costs and sustainability, and no changes from LCP’s proposal have been adopted.
- Current law raises the state pension age from 66 to 67 between 2026 and 2028 and to 68 between 2044 and 2046, while OBR forecasts show pension costs rising and Phoenix Insights warns an earlier move to 68 could delay access for about three million people.