(Bloomberg) — The U.K. will raise the age at which citizens can claim the state pension to 68, earlier than planned, as the government grapples with the mounting costs of an aging population.
The pensionable age will be raised to 68 over two years starting in 2037. The change, which has been brought forward seven years, will affect people born between April 6, 1970, and April 5, 1978. The children of the baby-boomer generation will now have to work longer to help fund their parents' retirement.
"We could have put this off, we could have failed to address it, we could have kicked it into the long grass, but it's important to the future of this country that we have a government willing to take these long-term decisions," Work and Pensions Secretary David Gauke told lawmakers in the House of Commons on Wednesday.
The change reflects Britain's changing demographics: a rising proportion of the population is old enough to claim a pension, and retirees are living longer. The flip side is a smaller proportion of the population is funding pensions through their taxes. All this comes against a backdrop of a mature economy unable to sustain postwar growth while forced into austerity during the financial crisis.
The announcement also underlines the weakness of Prime Minister Theresa May after her Conservative Party's catastrophic result in last month's snap general election.
Triple Lock
She had hoped to reduce the cost of state pensions with a pledge in her manifesto to scrap the so-called "triple lock" that guaranteed relatively generous annual increases. But after losing her majority, May cut a deal to secure the support of the 10 lawmakers from the Democratic Unionist Party, which insisted she drop the measure.
