WORK TILL YOU DROP
State pension age should rise to 75 from 68, report says – raising fears some workers will NEVER retire
The state pension age should rise to 70 by 2028 and to 75 by 2035 in a bid to boost the UK economy, according to a new report.
Currently, the state pension age is set to increase to 67 by 2028 and to 68 between 2044 and 2046.
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The government announced plans in 2017 to up the state pension age even faster to 68 between 2037 and 2039, although this hasn't been written into law yet.
But the Centre for Social Justice (CSJ) think-tank, headed by former Tory leader and ex-secretary of state for work and pensions, Iain Duncan-Smith, says the UK isn't responding to the potential of an ageing workforce.
It says hundreds of thousands of people aged 50 to 64 are deemed "economically inactive".
To combat this, it recommends helping older people "access the benefits of work" by providing support to them and employers, such as increased access to flexible working and training opportunities.
The think tank says this would also reduce the costs of benefits and boost the UK's gross domestic product.
But the government says the number of over-50s in work is already at a record high of more than 10.6million.
In its report, "Ageing Confidently: Supporting an ageing workforce", the think-tank stated: "Removing barriers for older people to remain in work has the potential to contribute greatly to the health of individuals and the affordability of public services.
"Therefore, this paper argues for significant improvements in the support for older workers.
"This includes improved healthcare support, increased access to flexible working, better opportunities for training, an employer-led mid-life MOT and the implementation of an 'Age Confident' scheme.
"As we prepare for the future, we must prioritise increasing the opportunity to work for this demographic to reduce involuntary worklessness.
"For the vulnerable and marginalised, a job offers the first step away from state dependence, social marginalisation and personal destitution."
The report added that if these measures comes into force, then the state pension age should rise too.
What are the different types of pension?
WE round-up the main types of pension and how they differ:
- Personal pension or self-invested personal pension (Sipp) - this is a pension you can set up on your own where you can pick the provider and choose how much to invest.
- Workplace pension - if you're an employee it's likely you'll have been auto-enrolled into a workplace pension. The pension provider is usually chosen by your employer and you won't be able to change it - but you can always try speaking to your HR department if you think employees would benefit from a different scheme. With workplace pensions, both the employee and employer have to pay in a combined minimum of 8 per cent.
- New state pension - this is what the state pays to those who reach state pension age after April 6 2016. The maximum payout is £168.60 a week and you'll need 35 years of national insurance contributions to get this. You also need at least ten years' worth of national insurance contributions to qualify fullstop.
- Basic state pension - this is what the state pays to those who reached state pension age on or before April 6 2016. The full basic state pension is £129.20 per week and you'll need 30 years of national insurance contributions to get this. If you have the basic state pension you may also get a top-up from what's known as the additional or second state pension.
It said: "In addition, provided that this support is in place, we propose an increase in the state pension age to 75 by 2035.
"While this might seem contrary to a long-standing compassionate attitude to an older generation that have paid their way in the world and deserve to be looked after, we do not believe it should be.
"Working longer has the potential to improve health and wellbeing, increase retirement savings and ensure the full functioning of public services for all."
CSJ chief executive Andy Cook said: "Right now, we are not doing enough to help older people stay in work and the state pension age doesn't even closely reflect healthy working life expectancy."
He added: "By increasing the state pension age, we can help people stay in gainful and life enhancing employment while also making a sound long-term financial decision."
But Helen Morrissey, pension specialist at financial provider Royal London warns that raising the state pension age could cause huge issues if retirees aren't given time to prepare.
She said: “While such proposals will undoubtedly save money, raising state pension age so quickly will cause huge issues for many retirees who will not have been given adequate time to prepare.
"These people will face severe financial hardship if they have not saved enough into a pension to cover the years between leaving work and claiming state pension. The government needs to think carefully before taking such drastic action.”
A Department for Work and Pensions spokesperson said: “Everyone’s state pension age is unique to them and in 2017 we raised the future retirement age to 68 so that it is sustainable now and for future generations.
"We’re creating opportunities for people of all generations with record employment.”
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