2nd March 2016
People starting their working lives today may not be able to retire until they are 75, experts have warned, as the Government launches a review the state pension age.
Former CBI boss John Cridland has been appointed to lead the review, the first of regular five-year reviews each Parliament.
The Government says the review is to consider changes in life expectancy, wider changes in society and to “help ensure that the State Pension remains sustainable for generations to come.”
It will look at “whether the current system of a universal State Pension age rising in line with life expectancy is optimal in the long run.” This could mean that the state pension age rises even if life expectancy slows.
John Cridland will report to the Secretary of State for Work and Pensions in time to allow government to consider the recommendations by May 2017.
The review will be forward looking and focussed on the longer term. It will not cover the existing State Pension age timetable to April 2028.
Those under the age of around 55 are likely to be affected by changes suggested under the review.
Minister for Pensions, Baroness Ros Altmann, says: “As our society changes it is only right that we continue to review State Pension ages and take into account the relevant factors to make sure that the State Pension is sustainable and affordable for future generations.”
Tom McPhail, head of retirement policy at Hargreaves Lansdown (pictured), says: “‘We fully expect state pension ages to go up faster than currently planned, and those joining the workforce today are likely to find themselves waiting till their mid-70s to get a pay out from the state system.
“This is simply a function of the big jumps we continue to see in life expectancy, which the state pension can’t hope to support without costs spiraling out of control.
“Whatever decisions they make, the government needs to make sure they communicate them very, very clearly so individuals can plan their retirement savings with some certainty about what they will get from the state, and when they will get it.”