Today's children face up to 60 years of working life

Today's children could have a working life of up to sixty years as the state pension age rises to 77 and beyond, according to research from PWC.

The Government has confirmed plans to link the state retirement age to average life expectancy, in last week’s Queen’s Speech and ministers have already announced plans to increase the state retirement age from 65 to 66 by 2020 and 67 by 2028.

Actuaries at PWC have now calculated that the impact of that change will be to leave future workers having to wait until they are almost 80 before they qualify for a state pension.

Someone born in 1964 is likely to face a state pension age of 68. Should they live long enough to reach that point, their life expectancy will be 88 years.

Based on these figures, the life expectancy for children born today who reach pensionable age is 97, meaning that they can expect a retirement age of 77.

For the next generation, lifespans are even more dramatically extended. They are likely to face a state pension age of 84. When they reach retirement age, they will have a life expectancy of 104.

Raj Mody, PWC’s head of pensions, said: “Many people born today face working from 17 to 77. Most people will want to stop working sooner but may not be able to afford to bridge the gap to the start of their state pension.

“The rising state pension age puts even more pressure on people to save. Even those people in middle age today whose state pension age might shift by a couple of years may want to start revising their plans now.”

The research also warns that the burden of funding state pensions will fall on an ever-smaller group of workers.

In 1900, there were more than 10 working age people to every pensioner. Today, that figure is 3.2, and by 2050, it will have fallen to 2.9.

Recent official figures suggested that funding the state pensions of current and future pensioners will cost the equivalent of £146,000 in tax for every household. State pensions are “unfunded” meaning there is not a sum of money earmarked to pay for them.

Latest estimates for Britain from the Office for National Statistics [ONS] suggest that boys born in 2010 will live an average of 78.2 years, while girls will live an estimated 82.3 years. Approximately a third of babies born this year are expected to survive to their 100th birthday.

People have a higher life expectancy at pension age than they had at birth, partly because they have survived so long and avoided risks of death, and partly because of the increasing quality of medical treatment

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