Pension age to rise to 70 by 2040?
A government pensions adviser has suggested that the state pension age should rise far faster than anyone is expecting. Lord Turner claims that we need the pension age to hit 70 by 2040 - 20 years earlier than currently proposed.
But why? And is this likely to happen?%VIRTUAL-SkimlinksPromo%
RisesThe state pension age is already on an upwards path. Right now woman are able to claim their state pension at the age of 62 and men at 65. However, by 2018 the pension age for everyone will hit 65. Then it will rise to 66 by 2020, 67 by 2028, 68 by the 2030s and 69 by the late 2040s. It will then be linked to longevity in a way that means it's like to hit 70 in the 2060s.
But in a speech yesterday, Lord Turner said this is far too late. According to the Daily Mail, the man best-known for chairing the Pensions Commission in 2005 suggested that 2040 was a better date to aim for, and he added that working later was no bad thing as '60 is the new 40'.
Trade magazine Money Marketing reported that Lord Turner said this needed to be allied to compulsory private pension saving at a much higher rate.
Will it happen?The state pension age is already rising - and the rate at which it rises past 68 will be subject to a yet-to-be determined calculation - which will be reviewed every five years - so there was always some question as to when we hit the age of 70.
The government has already shown a willingness to revise its schedule for how fast these rises will take place. Until the end of last year the government was claiming that the pension age would hit 68 in 2046, but now it is predicting this in the 2030s.
So it's not beyond the realms of possibility that we will reach retirement at 70 sooner than currently predicted.
Should we be worried?It seems that pensioners are already prepared for a later retirement. Research from Prudential found that 54% of people are prepared to work past the current state pension age in order to make life more comfortable. Some 23% would consider working full time and 31% would consider part time work.
The question is whether we will be equally relaxed about working in our late 60s when the retirement is a full 5 years later than it is at the moment - and the decision whether or not to work on has been taken out of their hands.