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Great Britain

Scrapping of state pension age increases by Labour leaves £20bn hole – and every household could pay £216 extra a year

HOUSEHOLDS face shelling out an extra £216 a year in taxes to cover the cost of Labour's plans to freeze state pension age.

The party's leader, Jeremy Corbyn, today revealed a sweetener in his election manifesto to keep the age people qualify for the state pension at 66.

But as Mr Corbyn is yet to reveal how the move will be funded, it could mean an extra £215 recouped from the UK's 27.8million households.

That's because according to financial provider AJ Bell, government figures show a one year increase in state pension age saves around 0.3 per cent of GDP per year.

So increasing state pension age from 66 to 67 would cost £6billion - or £216 per households - based on GDP currently standing at £2trillion.

Tom Selby, senior analyst at AJ Bell says it's "incredible" Labour hasn't detailed the costings.

What is state pension age?

FOR those born before April 6 1950, making you 69-years-old today, the state pension age was 65 for men and 60 for women.

Those born after this date, however, have seen the state pension age gradually rise depending on when they were born - and the age for men and women is now the same.

Currently, the state pension age is set to increase to 67 for men and women by 2028, and to 68 between 2044 and 2046.

And it could change again in future as the government announced plans in 2017 to up the state pension age at an even faster rate, to 68 between 2037 and 2039.

This has yet to be written into law though and it would need approval by Parliament before any changes could take force.

He said: "Make no bones about it – this is a gargantuan promise from Labour with enormous ramifications for those affected, society as a whole and long-term government spending.

“It is therefore incredible that the impact this will have on taxpayers doesn’t appear in the policy costings.

"This may simply be because planned increases in the state pension age run beyond the next Parliament, but such a short-term approach to something as vital to the long-term future of the UK as state pension reform is hardly encouraging."

Paul Johnson, director of think tank the IFS added: "A particularly expensive commitment is on the state pension age.

"Rather than allowing it to rise as longevity increases, Labour wants to keep it at age 66, a very expensive pledge in the face of demographic change."

The new state pension is currently £168.60 per week - £8,767.20 a year - but you need at least 35 years worth of national insurance contributions to get that amount, and at least ten years worth to qualify at all.

There's a difference system in place for those who reached state pension age or accrued qualifying national insurance years before April 6, 2016.

Mr Corbyn said in his manifesto: "The Conservatives have repeatedly raised the state pension age despite overseeing a decline in life expectancy.

"Labour will abandon the Tories’ plans to raise the state pension age, leaving it at 66."

He added that he's been inspired to make this promise after a "generation of women born in the 1950s have had their pension age changed without fair notification" - forcing many to work for longer.

In addition, Mr Corbyn has pledged to review retirement ages for physically arduous and stressful occupations, including shift workers, in both the public and private sectors.

Mr Corbyn had promised not to raise taxes for those earning more than £80,000.

But it's already been revealed that 3million married couples earning under £50,000 will lose £250 a year as a result of his hint to axe the marriage tax allowance.

The Sun has asked Labour how it plans to fund these pension policies.

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