5th December 2013
The state pension age is set to rise dramatically with an announcement expected in today’s Autumn statement from the Chancellor George Osborne as the BBC reports.
The age is due to rise to 68 from 65 in 20046. But that date will be brought forward until the mid-2030s. It is also speculation that the age could rise again to 69 in the late 2040s. People in their late 20s now will have to work until their seventies.
A Government statement says: “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.
“This will affect people in their forties and below; no-one over 50 will have a retirement age of 68 or more.”
The move is expected to slash £400bn from the pensions bill.
It is sure to concern many people. But some pension experts say it is inevitable given rising life expectancy.
Mark Wood, CEO, JLT Employee Benefits, says:“Life expectancy is currently increasing by roughly two years every decade or about five and a quarter hours a day! The Government has chosen a moderate course. A much greater change could have been justified. Today’s seventy year olds can, on average, look forward to twenty years of retirement. Omitting those over the age of 50 from the changes means that those affected have sufficient time to plan ahead.
“Western Countries are benefiting hugely from advancements in pharmaceuticals, public smoking bans, better diets and healthier lifestyles – and those railing against the changes being announced today must remember that this is unequivocally positive. It stands to reason that our pension provision and the length of our working lives must adapt accordingly with medical and health developments.”
Hargreaves Lansdown pension expert Tom McPhail says: “There are provisions in the pensions bill for the SPA to be linked to life expectancy. Currently, the SPA will rise to 67 by 2028 but will then pause before rising to 68 between 2044 and 2046. This was already widely acknowledged as being too late and too slow.”
“Given current low levels of private savings and improvements in life expectancy, it was unrealistic for those in their 40s and younger to expect that they wouldn’t see their State Pension Age rise again above age 67. In reality, many in work today are already unlikely to be able to afford to retire until their 70s, irrespective of when their state pension falls due.”