Calls to bring forward a rise in the state pension age to 68 will leave millions struggling to achieve a decent standard of living, according to finance experts.
The state pension age in the UK is currently 66, but it is scheduled to rise to 67 between 2026 and 2028 and then to 68 between 2044 and 2046. However, there is increasing speculation that his will now happen sooner.
Recently, the London School of Economics’ (LSE) Centre for Economic Performance recommended that the state pension age be increased to 68 “as soon as possible”, while other analysts have suggested the figure will need to rise again to 70 if it is to be affordable for the country.
However, any increase means many old people will die before ever receiving their state pension, while others might be forced to stay on in jobs which impose heavy physical demands despite existing health problems.
Mark Screeton, CEO at SunLife, warned bringing forward the increase in the state pension age would be a hammer blow to the millions of people who have very small or no private pension schemes in place.
He said: “According to our Life Well Spent report, one in four (24 percent) of retired people are coping on the state pension alone – currently £11,502 a year – while 28 percent of over 50s not yet retired have no pension savings apart from the state pension.
“According to Retirement Living Standards an individual needs an annual income of £14,400, for a ‘minimum standard of living’ while for a ‘moderate’ standard of living, an income of £31,300 is needed. This means that even after April’s 8.5% hike, the current new state pension still falls well short of what is needed for pensioners to get by, let alone live well.
“Therefore, if the state pension age were to rise to 68 by the early 2030s rather than 2044-46 as currently planned, millions could be left struggling with no private pension savings to fall back on.”
He added: “While some may be able to continue to work until 68, there are a number of barriers preventing many people over 50 from staying in work. For example, health and physical ability, care responsibilities, lack of flexible working opportunities, lack of support for later life career changers, and age discrimination. So, more needs to be done in the first instance to ensure high quality work and career support is available for those who want it.
“Furthermore, our research shows that 59 percent of grandparents are relied upon to provide free childcare for their grandchildren, saving families a combined £90bn in childcare costs. If the state pension age were to rise, it could have a knock-on effect on families across the UK who will no longer be able to rely on grandparents to help out as they themselves could still be working.
Mr Screeton said there may be a case to increase the state pension age in line with increased life expectancy, but he said this should not happen before 2044.
“By 2044, pensions auto enrolment will have been in place for more than 30 years, meaning far fewer people will be relying on the state pension alone. Assuming the age for accessing a private or workplace pension does not change significantly – it is currently 55 and is due to increase to 57 by 2028 – this should mean more people will be able to retire earlier than 68 if they wish,” he said.
