State pension age ‘to hit 70’ despite falling life expectancy and ‘many will die too soon’ | Personal Finance | Finance
The UK retirement age is set to rise and rise, even though life expectancy is falling.
Millions will get it for a much shorter period than today, if they live long enough to get anything.
Poorer workers and those in manual jobs do not live as long and could die before they reach state pension age, which means they get nothing despite decades of National Insurance (NI) contributions.
And those who do reach the higher state pension age will get less than today.
Until recently, state pension age was for 65 for men and 64 women, but now it is 66 for everyone.
This is only the beginning, as the government looks to reduce the state pension bill as the population ages.
That’s its excuse, anyway.
In practice, it is pressing on with plans to increase the state pension age even though Brits are dying earlier than before.
In France, president Emmanuel Macron faces a battle as he tries to increase the retirement age from 62 to 64.
In the UK, we are already way past that with plenty more to come.
The next increase will be phased in between 2026 and 2028, when the state pension age will increase to 67.
It is slated to rise again to 68, between 2044 and 2046.
The Department for Work and Pensions is now considering whether to bring that forward, so it rises between 2037 and 2039 instead. It must decide by May 7 this year.
Its decision will be based on factors such as rising life expectancy and intergenerational fairness, but most of all, money.
Campaigners want the DWP to stop or even reverse state pension age hikes, given that life expectancy has slipped since the pandemic.
In 2014, average life expectancy for a 67-year-old man was 21.1 years, and 23.1 years for a woman, official figures show.
This has now retreated to 18.7 years for men and 20.8 years for women.
Despite this, most experts reckon Ministers will accelerate state pension age increases, saving tens of billions but at huge cost to millions.
Younger workers look set to have it even tougher, said Tom Selby, head of retirement policy at AJ Bell.
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He warned younger savers to prepare for a world where the state provides less of their retirement income than it does now.
“It would not be surprising if those in their 20s and 30s today have to wait until their 70th birthday or even beyond to receive the state pension.”
And when they do finally get it, the payout will be smaller than today.
It’s a gloomy outlook, but all too real. Today’s employees do get access to the auto-enrolment company pension scheme, but that won’t be enough to fund a comfortable retirement on its own.
The growing army of self-employed are in a worse position as most invest nothing for retirement.
We all have to save like crazy but as wages stagnate or shrink in real terms that gets harder by the year.
If this was France, we would all be rioting in the streets.