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02 Mar 2016

Government pension review could push back retirement age into 70s

An official government review of the state pension age could mean that people of working age have to wait until their 70s to retire, The Guardian reports.

The review will take into account the state retirement age from April 2028, at which point both men and women will be able to retire at 67 under current plans. Independent reviewer John Cridland, former director general of the CBI, has been called in to assess whether pension age should still be linked with life expectancy.

It has already been estimated by the Office for Budget Responsibility that based on current life expectancy figures, the age at which workers in the UK can retire could reach 70 by the mid-2060s; however, experts are now warning that this could happen even sooner.

“We fully expect state pension ages to go up faster than currently planned,” advised Tom McPhail, the head of retirement policy at Hargreaves Lansdown, “and those joining the workforce today are likely to find themselves waiting until their mid-70s to get a payout from the state system.”

He added that whatever decisions the government make, they need to “communicate them very, very clearly so individuals can plan their retirement savings with some certainty about what they will get from the state, and when they will get it.”

Caroline Abrahams, director of Age UK, urged that any increases to the pension age should not just be based on life expectancy. She said that the charity asks John Cridland to also take “health and employment opportunities” into consideration, and supported McPhail´s view that it was essential for the government to communicate with the public and give them “plenty of notice ahead of any change […] to avoid any surprises when it comes to retirement.”

Meanwhile, pensions minister Ros Altmann added: “As our society changes, it is only right that we continue to review state pension ages […] to make sure that the state pension is sustainable and affordable for future generations.”

Copyright M2 Bespoke 2016

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