State pension fury as Rishi Sunak advised to raise entitlement age to unprecedented high

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The state pension is set to increase by 3.1 percent in April, but with inflation continuing to soar, many in Britain are facing a real term cut. The Bank of England has warned inflation could hit 7.25 percent next month, just as the energy cap jumps from £1,277 to £1,971 annually. Inflation in the UK hit a 30-year high of 6.2 percent last month, confirming many pensioners’ worst fears. This may not be the only problem facing savers in years to come, as debate about the age of entitlement is also rife.

Currently, the state pension age is 66, and two further increases have been set out in legislation – a rise to 67 for those born on or after April 1960 should come into effect by 2028, and a rise to 68 between 2044 and 2046 for those born on or after April 1977.

However, some are suggesting that the Government should accelerate this timeline.

The International Longevity Centre (ILC), a think tank, suggested in a recent report the timeline will need to be brought forward for the system to remain “intergenerationally fair” and “fiscally sustainable”.

They added that the Government’s timetable should be accelerated by 15 years, with the state pension age rising to 68 by 2031 to keep up with an ageing population.

In conjunction with this the state pension age would have to rise to 70 by 2040, the ILC added.

Les Mayhew, head of global research at ILC, believes it will need to continue to rise, and explained: “Deciding state pension age is not a trivial matter.

“The decisions made in the latest review will impact on the incomes of everybody, whether that be via pension benefits or taxes.

“Frankly, we’re probably going to have to increase SPA further between 2030 and 2045 for it to be intergenerationally fair and fiscally sustainable.

“It’s not a question of ‘if’ but ‘when’ and ‘by how much’.”

He added: “The impact of Covid on life expectancy needs to be considered in this data, but the trends are fairly well set in stone.

“However, the government will need to assure that any plans for increases do not unduly exacerbate existing income inequalities without some form of remediation.

“Those who are unable to work for health reasons may well need additional help.”

In December, the Government launched a statutory review into increasing the state pension age, with findings set to be published in May 2023.

There are plans to accelerate the current timetable, to increase the state pension age from 67 to 68 between 2037 and 2039, seven years earlier than the previously legislated date.

READ MORE: ‘Daylight robbery!’ Pensioners could lose £1,400 over next two years

“There has previously been speculation that the current capital gains tax rates of 10 percent and 20 percent (or 18 percent and 28 percent for property) will be scrapped and instead everyone will pay income tax rates on their gains.

“This move was mooted by the Office for Tax Simplification (OTS) in a previous review.

“The stipulation from the OTS was that investors should get some sort of inflationary relief, so they are only taxed on above-inflation gains.

“Clearly any relief would reduce the tax-take for the government, so that may be quietly ignored in any final rules.”



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