Pensions BOMBSHELL: Work until you’re 75 after drastic review of state pension age

PEOPLE could soon have to work into their mid-70s before qualifying for their state pension, retirement experts warned yesterday.

The 2014 Pensions Act requires the state pension age to be reviewed during each Parliament and yesterday former CBI director general John Cridland was appointed to lead the first reassessment to take place.

It will consider changes in life expectancy, wider changes in society and “help ensure that the state pension remains sustainable for generations to come”, the Government said.

But Tom PcPhail, head of retirement policy at financial services firm Hargreaves Lansdown suggested younger workers could find themselves having to wait until their mid-70s to start drawing the state pension.

“We fully expect state pension ages to go up faster than currently planned, and those joining the workforce today are likely to find themselves waiting until their mid-70s to get a payout from the state system,” he said.

“This is simply a function of the big jumps we continue to see in life expectancy, which the state pension can’t hope to support without costs spiralling out of control.

“Whatever decisions they make, the Government needs to make sure they communicate them very, very clearly so individuals can plan their retirement savings with some certainty about what they will get from the state, and when they will get it.”

His call was echoed by Paul Green, of retirement specialists Saga, who referred to the current campaign by women born in the early 1950s who have seen their retirement age increase and have criticised the Department of Work and Pensions for a lack of notice.

Mr Green said: “Reviews to the state pension age are understandably very emotive. Whilst many people recognise the need to extend working lives for those that are able there has been repeated criticism of the speed in which previous changes have been introduced.

“Many people, particularly women, had made plans for their retirement and felt that they weren’t notified of the changes early enough — leaving them with little to no time to make alternative plans to fund their retirement.

“We urge the pension’s minister not to repeat past mistakes and promise that any changes will not affect those within ten years of the current expected retirement age to give both men and women a fair amount of time to properly plan.”

Owen Smith, shadow work and pensions secretary, said: “People are right to worry that the terms of this review may suggest that the Government is set to speed up rises in the state pension age, throwing into chaos the retirement plans of millions of British workers.”

At the moment, the state pension age is set to equalise for men and women at 65 by 2018 and then rise to 66 by 2020.

Mr Cridland’s review will not look at the current pension timetable set by previous governments, which goes up until 2028 and includes the controversial increase to the state pension age for women from 65 to 66.

Mr Cridland, who is not being paid for his role, will report in time to allow Government to consider his recommendations by May 2017.

Age UK urged Mr Cridland to take into consideration big differences in health and employment opportunities in various parts of the UK.

“As we live in a country where healthy life expectancy varies so much and there are widening inequalities between deprived and affluent areas, it is essential that further increases to the state pension age should not be based on life expectancy alone,” said a spokeperson.

Pensions Minister Baroness Altmann said: “As our society changes, it is only right that we continue to review state pension ages and take into account the relevant factors to make sure that the state pension is sustainable and affordable for future generations.”

Mr Cridland, who is currently chair of board of Transport for the North, said: “I look forward to meeting many stakeholders, hearing the views of experts and the experience of organisations working in this area to help shape the review.

“I know how important this issue is, and will consider all the evidence to ensure that we have a State Pension age fit for the future.”