Aged under 47? You'll retire later

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The government has released its latest life expectancy predictions, and pensions experts have fallen on them in a frenzy. Their calculations show that George Osborne's new rules for the state pension will mean that everyone aged 47 or under is likely to see their state pension age rise to 68.

At the age of 47 Heston Blumenthal falls into this category. But what does it mean for you?

Life expectancy

The government issued a new set of life expectancy figures. For those hitting the age of 65 right now there has been very little change to their life expectancy since last year (it has shifted about a month). For younger people there have been small rises.

The predicted life expectancy for a newborn today is 90.7 for boys and 94 for girls. For a 45-year-old its 86.2 for men and 89.3 for women. For a 65-year-old it's 86.4 for men and 89 for women, and for an 80-year-old its 89.5 for men and 91.1 for women.

State pension ages

Pension boffins at Towers Watson then plugged those figures into Osborne's formula for calculating when people will hit state pension age (in order to spend a third of their life receiving a state pension).

They calculated that the state pension age would reach 68 in 2036 (starting to rise in 2034). This will affect anyone aged 47 or under.

It will then reach 69 in 2049 (starting to rise in 2047). This will affect those aged 31 and under - and those aged 33 will be the first to retire at 69.

It will then rise to 70 in 2063 (starting in 2061). It means that someone aged 20 today will get their state pension at the age of 70.

Goalposts move

Interestingly, the figures show that life expectancy isn't increasing as fast as it has before - and that's even building in assumptions of a very fast increase in life expectancy over the next two years.
Matthew Fletcher a senior consultant at Towers Watson, said: "Putting the new ONS life expectancy assumptions into the Government's formula points to a slightly slower increase in the State Pension Age than was signalled in the Autumn Statement. This is not the final answer, though. All eyes should be on the next set of ONS assumptions, due in two years' time, which are the first ones that could affect State Pension Ages."

Infuriatingly he also points out that not only is this not the final answer, future governments also have plenty of wiggle room. He says: "If future Governments do not like the answers that the ONS life expectancy numbers produce, a small tweak to the target retirement length will quickly solve the problem."

It means that we could be carefully working to retirement at 67, 68, 69 or 70, and a future government could announce that we're only going to spend 25% of our lives receiving a state pension - so we have to work at least five years longer.

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