Retirement age nearing 70 for the young

Youngsters will be working into their 70s and those in their 40s will have to wait until they are 68 before they can retire, according to plans announced in last week’s Autumn statement.

The Chancellor George Osborne confirmed that the state pension will rise to 68 in the mid 2030s, 69 in the late 2040s and future rises would be regularly reviewed to ensure they were in line with life expectancy.

The state pension age will already rise to 66 in 2020 and 67 from 2026.

George Osborne defended the decision by saying; 

“This is one of those difficult decisions that governments have to make if we’re serious about controlling public finances.”

Responding to the news Caroline Abrahams of Age UK said it would create a more ‘unfair’ society.

“It will be especially tough on people who won’t live very long – who are likely to be on low incomes – because they may find they don’t have much retirement left to enjoy.”

“It will also be tough on those who lose their jobs in their fifties and sixties, of whom there are far too many at present, whose chances of ever getting another job are slim.  And it will be tough on those in poor health who cannot work, or who are caring for others.  For all these reasons we are worried this policy could create a more unfair society.”

In an attempt to address the balance, the Chancellor did rule out including the state pension in an overall cap on welfare spending, saying it wouldn’t be fair for pensioners to pay for the housing benefits of young people.

Mark Wood of JLT Employee Benefits pointed out that the changes could have been bought forward earlier.  He said;

“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.”

Sarah Lord of Killik Chartered Financial Planner added “It is recognised that we are all living longer and therefore the burden on the state pension is increasing so a move to increasing the state pension age yet again is logical.  However, it begs the question how many more times it will increase – I wouldn’t rule out a state pension age of 75 before long!”

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