Becky O’Connor, Director of Public Affairs at PensionBee comments: “Such a dramatic increase to the State Pension age from the current age of 66 to possibly as high as 71 is quite an alarming prospect.
“People depend on the State Pension for a significant chunk of their retirement income. It’s also key to confidence in people’s ability to retire at all.
“Even the suggestion that people won’t get it until their 70s will make people feel more distrustful than they already do in the State Pension system and may cause actual worry and anxiety about their future.
“If people suffer ill health or face the need to care before 71, as is likely for many, they may have to give up work sooner than they can receive their State Pension anyway and have to claim working age benefits for longer instead.
“While the sustainability of the State Pension needs to be properly examined, increasing the age people get it may not turn out to be the cost saving a government would hope for.”
“PensionBee research has found that nearly half (48%) of UK savers believe they won’t be able to retire before the State Pension age if and when it is raised to 68, as projected between 2044-2046. Given these findings, it's reasonable to anticipate even more people would be forced to work for longer if the State Pension age rises to 71 by 2050, as suggested by the International Longevity Centre.
“Our research also indicated that the perceived ideal retirement age is 60 - over a decade earlier. The growing disparity between this preferred retirement age and an increasing State Pension age would mean people would have to save even more through private pensions if they wanted to retire earlier. The ‘Pre-State Pension Gap’ is the total amount of income an individual requires to cover their expenses ahead of their State Pension entitlement from other savings, and this would get bigger.
“There’s also a risk that people could use up too much of their private pension savings early in retirement if they had to stop work before State Pension age, possibly leading to greater poverty in later old age.”
Kate Smith, Head of Pensions at Aegon, said:
“We know from our Second 50 research that over 95 per cent of us expect to depend on the State pension in later life - so this report will be concerning for millions of people.
“Pushing back the state pension age to age 71 would be a shock for many – when they are expecting to receive this from age 67 or 68. Some will only receive it for a short time, others not at all.
“This report, published in an election year, highlights the need for the political parties to detail their plans for state pensions ahead of the UK general election. This is too important an issue to be kicked into the long grass. People need to know where they stand and what this means for their later life, giving them plenty of time to adjust their working and savings plans.
“Raising the state pension age feels a like very blunt instrument - and would likely penalise those most in need.
“This report from the International Longevity Centre shows that we all collectively and individually would benefit from looking more closely at the uncharted territory of later life. Aegon’s Second 50 report offers a strong framework for this much needed discussion to be built around.
“The Second 50 is difficult enough to navigate given the longer working lives many of us face. We cannot look at what’s gone before to know what to do. Certainty around the state pension is vital.”
Lily Megson, Policy Director at My Pension Expert, said: “Entering your seventies with retirement but a blip on the horizon is a sobering thought for many – yet a very tangible reality that millions will face in years to come. After decades with their noses to the grindstone, don’t Britons deserve more support and appreciation?
“Although this may feel disheartening to many, it needn’t crush people’s dreams of a comfortable retirement beginning at whatever date they see fit. Diligent financial planning can make this possible – in other words, taking stock of pension products and investments, and engaging with independent financial advice to create a robust retirement plan where necessary. Where the government must intervene is facilitating this support and providing the necessary tools to help make this happen for Britons.”
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