Thursday, 23 March 2017

State pension age should rise to 70 for those under 30, review recommends



People aged 30 and under face working until the age of 70 before they can draw a state pension under projections drawn up by a Government review.
 
Separate recommendations published at the same time by former CBI boss John Cridland could also mean people currently in their 40s see the age they start receiving the pay-out pushed back a year.


The Cridland review calls for the state pension age to rise from 67 to 68 between 2037 and 2039, seven years earlier than currently planned.


Experts said if the recommendations were taken up it would see nearly six million people currently under 45 face the date they receive their state pension pushed back a year.


Ministers will decide in May whether to go ahead with the proposals from both reports.


The state pension age is currently due to rise in stages, rising to 66 in 2020, and reaching 67 between 2026 and 2028.


It is already expected to rise to 68 eventually - but not until 2044 to 2046.


Mr Cridland's report, in an independent review commissioned by the Government, said the rise should happen earlier, providing greater "intergenerational fairness" and keeping the state pension affordable for taxpayers.


It also recommends the scrapping, in the next Parliament, of the pensions "triple lock" which currently means the pay-out goes up by inflation, earnings, or 2.5% - whichever is highest.
 
 
Nearly £100 billion per year is currently spent by the Government on the state pension and pensioner benefits, and the proportion of retired people compared to those of working age is rising.


A separate report from the Government Actuary's Department pointed to the possible need for the state pension age to rise further to 70 between 2054 and 2056 - affecting people currently aged 30 or less.


That is based on one scenario it was asked to consider, under which someone spends 32% of their adult life in receipt of the state pension.


Tom McPhail, head of retirement policy at Hargreaves Lansdown, said the Cridland review was "going to be particularly unwelcome for anyone in their early 40s, as they're now likely to see their state pension age pushed back another year".


He added: "For those in their 30s and younger, it reinforces the expectation of a state pension from age 70, which means an extra two years of work. This report also looks like the death-knell for the state pension triple lock."


The possibility of varying the state pension age to reflect varying life expectancies across the country had also been raised.


But the report said having regional variations to the state pension age was not practical.


Former pensions minister Baroness Altmann said: "I would like to see more allowance for people to get their state pension earlier if, for example, they are in poor health or started work exceptionally young, perhaps in tough industrial jobs, and genuinely cannot keep going till nearly 70."




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