23 Mar, 2017
State pension age could be raised to 70
Two separate reports for the government have raised the possibility that millions of people may have to work longer to qualify for a state pension.
A study for the Department for Work and Pensions (DWP) has proposed that workers under the age of 30 may not get a pension until the age of 70. The second report, undertaken by John Cridland, suggests that those under the age of 45 may have to work a year longer, to 68.
The government is due to decide on the state pension age after considering both reports by May.
Ministers are under pressure to discuss the projected rise in the cost of pensions, which has been affected by longer life expectancy and the increasing ratio of pensioners to workers.
But at least six million people face the possibility of having to work longer.
Tom McPhail, head of retirement at Hargreaves Lansdown, said: "This report is going to be particularly unwelcome for anyone in their early 40s, as they're now likely to see their state pension age pushed back another year".
He added, "For those in their 30s and younger, it reinforces the expectation of a state pension from age 70, which means an extra two years of work".
In an extreme scenario, specialists from the Government Actuary's Department (GAD) said the state pension age could increase as high as 70 by 2054.
Currently, under existing rules, everyone is due to get a pension by the age of 68.
Such a situation would affect anyone born after April 1986 - in other words anyone under the age of 31.
The "extreme" scenario involves an assumption that people spend 32% of their adult life in retirement. The conventional assumption until now has been that people will spend 33.3% of their lives in retirement.
In the worst-case situation, the GAD calculations also suggest that the change in the retirement age from 67 to 68 could be moved forward by as much as 16 years.
So, while that increase is not due to materialise until 2044, it could be brought in as soon as 2028, affecting those now who are in their late 50s.
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