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Autumn Statement: State pension age rise brought forward Autumn Statement: George Osborne says job not yet done
(about 1 hour later)
More people will have to work until they are 68 before being entitled to a state pension under plans to be announced by Chancellor George Osborne. Chancellor George Osborne has said the UK is growing faster than any other major economy but stressed the job of recovery was "not yet done".
The state pension age was set to change in stages from 65 to 68 by 2046. Delivering his Autumn Statement, he said growth forecasts for this year had more than doubled from 0.6% to 1.4%.
But that date will be brought forward to the mid-2030s, Mr Osborne will say in his Autumn statement. And borrowing is down "significantly more than forecast" with the country set to be back in the black by 2018/19.
The pension age could rise again to 69 in the late 2040s, he will add, meaning people now in their 20s may have to work until they are 70. But Mr Osborne told MPs he wanted a "responsible recovery" and warned of "more difficult decisions" to come.
Moving the change forward will ensure "the country can offer people decent pensions", a government source said. Despite the better economic news, he said: "The job is not yet done."
Mr Osborne is due to deliver his statement to the House of Commons at 11:15 GMT. Among the measures reported so far are: He acknowledged that the effects of the economic crash on family budgets were still being felt, but he pledged: "The hard work of the British people is paying off and we will not squander their efforts."
A new formula will increase the state pension age to keep pace with increasing life expectancy. He confirmed that millions will have to wait longer for a state pension - so that the pension age "keeps tracks with life expectancy" and future taxpayers are spared a massive bill.
The government will say that people should spend on average no more than one-third of their adult lives in retirement. The date when the state pension age rises to 68 will be brought forward to the mid-2030s - it had not been due to kick in until 2046 - and the age could rise to 69 by the late 2040s.
It means people now in their forties will not now get the state pension until they are 68, while those in their thirties will have to wait until they are 69.
There will be an extra £1bn of cuts from the budgets of government departments for each of the next three years.
Other key measures reported so far:
The BBC has also learned that the chancellor will cap business rate increases in England and Wales to 2% next year, rather than the rate of inflation, in an effort to boost firms and High Streets.The BBC has also learned that the chancellor will cap business rate increases in England and Wales to 2% next year, rather than the rate of inflation, in an effort to boost firms and High Streets.
The government has already announced the state pension age will increase to 66 by 2020 and 67 by 2028; these dates will not change. The Autumn Statement is a half-yearly update on the Budget, allowing the Chancellor to give MPs a guide to his tax and spending plans.
But it said in a statement: "Under current estimates of life expectancy the principle being confirmed today implies the SPA (state pension age) rise to 68 could come forward to the mid-2030s, from its current date of 2046, rising to 69 by the late 2040s. These plans are based on the economic projections provided by the Office for Budget Responsibility (OBR) - a body set up in 2010 to provide independent economic forecasts.
"This will affect people in their forties and below; no-one over 50 will have a retirement age of 68 or more."
A review of the way the state pension age is calculated, announced earlier this year, will be informed by "up-to-date" life-expectancy figures.
A government source said: "This is part of the government's long-term plan to secure a responsible recovery.
"It is a difficult decision to make sure there is a fair deal across future generations and that the country can live within its means.
"It will help make sure the country can offer people decent pensions in their old age in a way that with increasing life expectancy the country can also afford."
The Chancellor makes two big set-piece speeches on the economy in the Commons every year - the Budget, in the spring, and the Autumn Statement, which used to take place in November but has moved to December in recent years.
He will set out the government tax and spending plans - based on the economic projections provided by the Office for Budget Responsibility (OBR) - a body set up in 2010 to provide independent economic forecasts.
Mr Osborne is expected to announce a bigger than expected fall in public borrowing on the back of an upturn in economic growth.
The Office for Budget Responsibility could more than double its previous projection for UK growth of just 0.6% at the time of the Budget in March - but Mr Osborne is likely to stress that there is still much work to be done to restore the economy to full health and there will be no let up in austerity.
Labour says the government has done nothing to address the "cost of living crisis" facing many people and claims, on a new poster, that working people are on average £1,600 a year worse off since the last election.Labour says the government has done nothing to address the "cost of living crisis" facing many people and claims, on a new poster, that working people are on average £1,600 a year worse off since the last election.
Shadow chief secretary to the Treasury Chris Leslie said: "What we need from the Autumn Statement is a long-term plan to tackle the cost-of-living crisis and earn our way to higher living standards for all, not just a few at the top."Shadow chief secretary to the Treasury Chris Leslie said: "What we need from the Autumn Statement is a long-term plan to tackle the cost-of-living crisis and earn our way to higher living standards for all, not just a few at the top."
* The BBC will have full coverage of the Autumn Statement with live text and video and analysis on the BBC News website, coverage all day on the BBC News Channel, a BBC2 special programme from 11:00 - 14:00 GMT and a BBC Radio 5 Live special from 11:15 - 14:00 GMT* The BBC will have full coverage of the Autumn Statement with live text and video and analysis on the BBC News website, coverage all day on the BBC News Channel, a BBC2 special programme from 11:00 - 14:00 GMT and a BBC Radio 5 Live special from 11:15 - 14:00 GMT