Published: Sun, March 26, 2017
Economy | By Melissa Porter

State pension age may rise to 70 under new proposals

State pension age may rise to 70 under new proposals

John Cridland was appointed to review the state pension age and has recommended it should rise from 67 to 68 by 2039, seven years earlier than now timetabled.

Former CBI director general John Cridland, who was appointed as the Government's independent reviewer of state pension age a year ago, said the state pension age should increase from 67 to 68 between 2037 and 2039.

Steven Cameron, pensions director at Aegon, says these people and other consumers should be able to draw down their pension sooner depending on their circumstances.

The government has already announced an increase in the qualifying age for the £155.65-a-week payment from 65 to 66 by 2020 and to 67 by 2028.

The official retirement age is to rise slowly from 65 to 68 by 2046.

"The aim is to smooth the transition for tomorrow's pensioners, and to try to make the future both fair and sustainable.' Mr Cridland's report said the state pension was a 'pay as you go" system - meaning today's workers paid for today's pensioners.

John Cridland, former director-general of the Confederation of British Industry and the author of the government-commissioned study, also rules out "early access" to the state pension.

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. This was in part due to an expected doubling in the ratio of pensioners to people of working age by 2064.

She said: "Retirement can be a process rather than an event, with people cutting down gradually rather than suddenly stopping and more help for people to stay in the labour market longer is important".

This would mean that anyone under the age of 45 would qualify for the pension at 68 at the earliest - a change that would impact around 5.8 million people. B y the time people approach retirement nearing 2050, there will be 357 pensioners for every thousand people of working age. Under our recommended timetable, state pension spending would be 6.7% of GDP in 2066/67, which is a reduction of 0.3% compared to the principal OBR projection.

The Cridland review also recommended abolishing the "triple lock" guarantee, which ensures state pension ages only increase in line with inflation, in the next Parliament.

Richard Apletree, managing director at giffgaff money, said: "It's a shame to see the financial difficulties of younger workers not only affecting their ability save for the near future, but also forcing them to work long into their retirement years".

The Government's Actuary's Department has suggested a scenario that increases the pension age from 69 to 70 over two-years in the 2050s.

"But he bizarrely ends up recommending that everyone should see the value of their state pension fall by axing the triple lock".

The possibility of varying the state pension age to reflect varying life expectancies across the country had also been raised. The main finding is that the state pension age will have to increase again within 20 years.

His review called for everyone around the age of 50 to be offered a mid-life MOT to help people plan their later lives, including whether they need new skills to enable them to work for longer.

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