A new report suggests that plans to increase the state pension age to 66 years old should be abandoned as we aren’t living as long as we had hoped, as suggested by a new report.
According to current plans, the age that people can apply for the state pension would rise to 67 in 2028 and eventually to 68 by 2028.
Consultant LCP states that life expectancy is at a halt and that no changes should take place for the next 30 years.
Just recently, the government launched its most recent review of state pension age.
At the moment:
For those who have reached the state pension age in April 2016, the new flat-rate full state pension is PS179.60 per week
For those who were born before April 2016, the full basic state pension is now PS137.60 per week. They might also be eligible for a Pension Credit credit top-up
Both men and women can now claim the state pension starting at 66, an age that has been steadily increasing since October last year.
According to government plans, the state pension age will rise to 67 in this decade and 68 by 2039.
These calculations ensure that no one spends more then a third of their adult lives in retirement.
However, the official longevity estimates have been reduced since the plans were made, even before the effects of the Covid pandemic.
LCP believes that the transition to 67 shouldn’t happen before 2051 and to 68 after the mid-2060s.
This initial move would have a positive impact on 20 million people who were born in the 1960s, 1970s, or early 1980s. However, it would have cost the Treasury approximately PS200bn.
Steve Webb, LCP partner and former pensions minister said that the government’s plans to increase the state pension age rapidly have been foiled by this new analysis.
“Even though the pandemic struck, the gains in life expectancy that we had witnessed over the past century had almost stopped, but the schedule of state pension age increases still hasn’t caught up to this new world.”
He stated that the government’s plans must be reexamined as a matter of urgency and that there was no case for a state pension age increase too soon.
The Department for Work and Pensions announced earlier this month that Baroness Neville Rolfe would be leading the next review of state pension age.
“The government must ensure that its decisions about how to manage its expenses are fair, transparent, and robust for taxpayers both now and in the future.” The DWP stated that the government must ensure that the state pension remains the foundation for financial security and retirement planning as the population ages.
Experts in pensions have called for a change in how state pension ages should be calculated.
Baroness Ros Altmann is also a former minister of pensions. She said that the current system helps the wealthy and healthy, but not the people most likely to die young.
“Currently, the state pension is only flexible for those who can wait longer and are wealthy enough. They can get a larger amount if they start their pension earlier. She said that those with poor health and no private provision cannot receive any money earlier, even at a lower rate.
Becky O’Connor is the head of savings and pensions at Interactive Investor. She stated that “the idea of a long, pleasant retirement seems to have been consigned to history.”
Many will have worked long hours in hopes of retiring at 65. They’ve been disappointed before, and they look set to be disappointed again. Many young workers today have little faith that the state pension will be there when they retire from work.
