State pension age may rise to 71 – when will you get yours?
Research warns the shrinking workforce and rising life expectancy may push up the state pension age
The state pension age may have to rise to 71 by 2050 to keep up with longer life expectancy, research suggests.
Average life expectancy in the UK is currently 78.63 years for men and 82.6 for women, while record levels of people are reaching age 100, which has an impact of the retirement savings you will need for you golden years.
But there are warnings that the ratio of workers to state pensioners is dropping as people live longer, while the workforce is reducing due to more staff quitting due to ill-health.
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This hits the number of people paying tax to help fund state pensions.
To combat this, the International Longevity Centre (ILC) has warned that the UK state pension age may have to rise to 71 to ensure there are enough people left in the workforce relative to the state pension.
When will you get a state pension?
The state pension age is currently 66.
It is already set to rise to 67 between May 2026 and March 2028 and then to 68 from 2044.
These state pension increases have been delayed in the past but the ILC suggests the changes may need to move faster due to gaps in the workforce.
Its latest healthy ageing and prevention index suggests the UK’s state pension age would need to be 70 or 71 compared by 2040 with 66 now to maintain the status quo of the constant number of workers per state pensioner.
Why does the state pension age need to rise?
Falling birth rates and an ageing and ill population is creating an issue for the UK as it reduces the workforce and ultimately productivity.
“The recent stalling in life expectancy during the austerity years and COVID has temporarily eased the pressure for increases in state pension age beyond 67 after 2027 but longer-term the pressure will be on to increase it to 68 or 69 before that,” says the ILC.
“But while we are facing ill health earlier in our long lives, the problem becomes even more pressing because of the exit of workers from the workforce long before they reach state pension age as it reduces the tax base to pay for pensions.”
It warns that a smaller working population and a large economically inactive population create huge labour shortages which must be filled by migrant labour which creates additional problems.
One solution is enabling people to work for longer, the ILC says, although this would mean taking steps to boost the nation’s health.
Becky O’Connor, director of public affairs at PensionBee, says such a dramatic increase to the state pension age is an alarming prospect.
“People depend on the state pension for a significant chunk of their retirement income. It’s also key to confidence in people’s ability to retire at all,” she says.
“Even the suggestion that people won’t get it until their 70s will make people feel more distrustful than they already do and may cause actual worry and anxiety about their future.
“If people suffer ill health or face the need to care before 71, as is likely for many, they may have to give up work sooner than they can receive their state pension anyway and have to claim working age benefits for longer instead.
“While the sustainability of the State Pension needs to be properly examined, increasing the age people get it may not turn out to be the cost saving a government would hope for.”
O’Connor also warns that people could use up too much of their private pension savings early in retirement if they had to stop work before state pension age, possibly leading to greater poverty later in life.
There is no need to panic though.
Jon Greer, head of retirement policy at Quilter, highlights that there should be a minimum of 10 years’ notice for individuals affected by any state pension changes so that they can adequately plan.
“Upping contributions to a pension can help make sure that if you do end up having to wait longer to access your state pension then you have enough private pension wealth to bridge the gap,” he says.
“Alternatively, you may want to save into different savings vehicles such as ISAs so that you can draw on that before you reach an age when you can get access to the state pension. The most important piece of advice is to take ownership and make a plan; don’t leave it too late."
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Marc Shoffman is an award-winning freelance journalist specialising in business, personal finance and property. His work has appeared in print and online publications ranging from FT Business to The Times, Mail on Sunday and the i newspaper. He also co-presents the In For A Penny financial planning podcast.
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