Both genders can now only collect their State Pension after their 65th birthday.
What it means: The State Pension is money the government gives old people to help them with their living costs after they stop working. It’s currently £164.35 a week, or £8,546 a year. That seems small if you’re used to a salary (the average UK worker earns £489 per week, before taxes) but it makes up a big part of government spending - £111 billion a year, or 42 percent of the entire welfare budget (for comparison, unemployment benefits cost £2 billion a year).
For a long time, various UK governments have said the State Pension is unaffordable. Their worry is that since the start of the Millennium, the UK government has spent more money than it earns, leading to a budget deficit (ofc we have an explainer for that). Government usually regard big or growing budget deficits as a bad thing which they need to fix: by cutting down spending, by earning more money (through things like raising taxes or growing the economy) and/or by creating money (generally not considered a good idea because it makes prices go up).
The State Pension is not only a big chunk of government spending - it’s getting bigger. That’s because people are living longer (so collect a State Pension for more years) and also because the proportion of old people in Britain is growing (because people aren’t having as many kids). That’s a problem because it’s young, working people who pay the taxes which fund the State Pension. The fewer of them there are, the less money the government has to pay pensions with, so the more debt it would need to take on if it keep pension payments the same (making the budget deficit bigger).
So governments have been looking for ways to pay out less pension money. One way it’s done this is by asking women to retire later. Until 2010, women could collect their State Pension five years earlier than men, at age 60. From today they will have to wait until they’re 65. That change should save the government about £30 billion. But the government’s not stopping there: the retirement age for both men and women is also going to gradually rise, to 68 by 2039.
Read our explainers on government spending and budget deficits.
