The State pension age will reach 66 by 2020, Chancellor George Osborne said today.
The Department of Work and Pensions will make the change in a bid to save £5bn every year by the end of the next Parliament.
Under Labour, the state pension age was to rise to 66 in 2026, 67 in 2036 and 68 by 2046.
As shadow chancellor, Osborne said in 2009 he would raise the state pension age (SPA) from 2016, rather than 2020.
Chancellor George Osborne said the change will be achieved with a gradual increase starting in 2015.
This means an acceleration in raising the pension age for women, at a new rate of 3 months in every 4.
The reform of public sector pensions will save £1.8bn by 2015, whilst changes to jobseekers' allowance, housing benefit, council tax benefit, pension credit and family tax credits will save the DWP £7bn more.
Osborne said overall the cuts would save the government £9bn in public spending. Of that, the welfare and pensions budget will be cut by £192bn.
"Raising the bar to age 66 will make the state pension more affordable for our children, but delaying retirement by a year is also sensible for private pension savers," says Andrew Tully, senior pensions policy manager at Standard Life.
"A 45-year-old man saving £200 a month and delaying his retirement age by just one year could see his pension rise by almost 10%."
Neil Gough, client services director at Creative Benefit Solutions says: "What has not been addressed is how fast the state pension age will rise from here onwards.
"In addition, the announcements made around the change in SPA, and those from the RDR Debate in Westminster this morning, do nothing to incentivise people to save for retirement and I continue to wait for clarification on how the NEST will help address this."
Ian Naismith, head of pensions market development at Scottish Widows, says: "Increases to SPA age send out an important message: the traditional retirement ages should no longer mark the end of our working lives.
"We are pleased the government has allowed a suitable period before the changes to previously planned increases start, while retaining the plans to align male and female state pension ages by 2020."
Trevor Matthews, chief executive of Friends Provident says the raising of the SPA by 2020 will have little relevance as older people choose to work longer anyway.
"People are living longer and this new breed of energetic and healthy individuals want to remain involved and not become economically inactive," he says.
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