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Why Britons will still work longer than French and Germans – despite pension age reprieve

State Pension
State Pension

Plans to accelerate a rise in the state pension age have been scrapped because of changes in life expectancy.

Yet while the British are now forecast to have shorter lives, they will still be doomed to work longer, experts have warned.

The current state pension age – which dictates when most people will retire from work –  is set at 66, and is in the process of increasing to 67. A further rise to 68 is legislated to take place between 2044 and 2046, but the Government was considering plans that would bring this forward to the mid 2030s in a bid to control spending.

The move would have forced 8.5 million workers approaching retirement to wait longer for their state pension, according to figures from the pension specialist Just Group.


But Work and Pensions Secretary Mel Stride told MPs on Thursday that the accelerated increase had been abandoned.

Mr Stride said that given the level of uncertainty around data on “life expectancy, labour markets and the public finances, and the significance of these decisions on the lives of millions of people”, the Government would carry out a further review into the state pension age within two years of the next parliament.

At first glance, it seems like good news for workers approaching retirement. But while many may be rejoicing, they still face working longer than their European counterparts, analysis has shown.

Across most developed countries, the average normal retirement age – based on a combination of both private and state pensions – was 64.2 years in 2020. In Britain, however, it was 66, according to the Organisation for Economic Cooperation and Development.

Proponents of a higher state pension age in Britain have argued that workers can access the bulk of their pension wealth at a much earlier age, thanks to a more comprehensive private saving system. The earliest age when most workers can access their private pots is set at 55 and is rising to 57.

However, very few workers have sufficient private pension funds to leave work early. For workers aged 55 to 66, the average size of a pension was just £37,600, according to official data.

This shortfall in retirement savings means that the British will spend a greater proportion of their life in work, as life expectancy falls and cost pressures grow. By 2064, Britain will have the sixth highest retirement age out of 40 OECD countries, at 67, compared with an average of 65.8. 

This is in stark contrast to comprable European nations such as France, where the national retirement age is far younger and has been fiercely defended. Proposals from the French Government to increase the normal state pension age from 62 to just 64 has triggered a wave of national protests in recent weeks. It would be the first time the French retirement age has increased in over a decade. It moved from 60 to 62 in 2010.

Jonathan Cribb, of the Institute for Fiscal Studies, a think tank, said there was a stronger sense of feeling about the importance of the state pension in France as, unlike the British, few French workers are equipped to support themselves in retirement without help from the state due to a comparative lack of private pension savings.

“Very few French have private pension savings, as almost everything occurs within the state,” he said. “Their government offers a significant earnings replacement – but this comes at a cost.”

Like its British counterpart, the French system is funded by tax receipts from today's workers.

Mr Cribb said: “The French pay a higher social security contribution, and the Government spends much more on their state pension system, at around 13pc of GDP.  Britain spends around 5pc.”

Yet even in countries with more robust private pension systems in place, governments have shied away from committing to a state pension age as high as Britain's 68. In Germany, the current state pension age is 65, and is in the process of rising to 67.  

The Spanish can claim their state pension when they either reach the age of 67, or the age of 65 if they have paid contributions for 37 years and nine months – although this is expected to reach 67 by 2027.

Yet here too, maintaining a state pension age this low has proved difficult from a public finance perspective. Spanish politicians have drawn up a raft of proposals that will increase social security costs for employers of high earners, in a bid to pump the system with more revenue.