Plans by the government to bring forward the increase of the state pension age to 68 by seven years will hit the “sandwich generation”.

Commenting on Work and Pensions Secretary David Gauke’s announcement that the government will be following the recommendations of Sir John Cridland, Pensions and Lifetime Savings Association director of external affairs Graham Vidler said that it will affect more than seven million people in their late 30s and 40s, known as the sandwich generation.

“This group are also those most at risk of inadequate private saving – they have not had the same access to final salary pension schemes as their parents and are too old to enjoy the full benefits of automatic enrolment that their children will see. We call on the government to follow up on one of Cridland’s other recommendations and provide access to ‘Midlife Financial MOTs’. This will help those people who need to work longer before they receive their state pension to make smarter financial choices to boost their savings,” he said.

Despite this, the reaction from the industry has been largely positive. Former Pensions Minister Steve Webb said the government was right to make this decision now and not in the mid-2040s and AJ Bell senior analyst Tom Selby said the government “simply had to grasp the nettle on state pension reform”.

“To put it simply, people are living a lot longer but the age at which they receive the state pension has barely moved in over a century. Failing to address this now would only store up problems for future generations,” Selby said.

Furthermore, Old Mutual Wealth head of retirement policy Jon Greer said the government deserve some credit for “biting the bullet”. However, he noted that the government hasn’t looked at the option of a flexible retirement age.

Aegon pensions director Steven Cameron noted that it is ironic that the government is proceeding with an accelerated increase in the state pension age days after statistics show improvements in life expectancy may be levelling off, “meaning this increase may be less justified on affordability grounds”.

In addition, Gowling WLG director Christopher Stiles looked at the impact the change will have on occupational pension schemes: “Occupational pension schemes contain their own normal retirement age, but that does not mean they are necessarily unaffected by changes to state pension ages. Many occupational schemes are designed to interact with the state pension system.

"For example, some schemes offer “bridging pensions” whereby the pension is payable at a higher level up to state pension age, to provide a smoother overall income in retirement. Employers and trustees therefore need to be aware of any possible impact of state pension age changes on their own pension liabilities.”

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