The Pensions Policy Institute is today calling for the retirement age to be raised to 72-75 years of...
The Pensions Policy Institute is today calling for the retirement age to be raised to 72-75 years of age to ensure that pensioners are guaranteed enough income on which to live comfortably.
It argues that as other countries such as the US, Germany, and Australia have already increased their state retirement age to 67 or beyond it is increasingly important to ask the question whether the UK should follow suit.
Benchmarked against life expectancy, the PPI says 90% of people are now living to the state retirement age of 60 currently in place, compared to just 66% in 1950 when the system was set up.
Life expectancy has gone up by 8 years in that time, it adds.
However, the PPI explodes the myth that government cannot afford to pay pensions at current rates, saying that if the government did not raise the state retirement age, public spending on pensions would only rise by 1% over the next 50 years according to current trends.
Where it would make a difference, it says, is in raising the level of basic state pension (BSP) actually paid out.
If the state retirement age were set at 70, it would enable the government to increase the BSP by 50% by 2030.
Raising the state retirement age would also refocus BSP payments as an insurance against poverty in old age, as those living longer than expected would be guaranteed a fair income instead of spreading out the pensions pot across an ever increasing number of claimants.
The cut-off age for pushing people into a new system with a higher retirement age should be set at about 40.
Workers 40 or younger would be able to adopt to the new retirement age, adopting their savings plans to take account of the new rules.
The government needs to prepare a simple and clear message on the issue, however, because it is such an emotional issue, the PPI says.
The government also needs to ensure that people who cannot work until the new, higher retirement age are not penalised, and ensure that private and occupational schemes are prepared for any changes that may come along.
What made financial headlines over the weekend?
Q2 net sales dropped almost 50%
‘Important to have an anchor’
Lack of innovation for solutions