A pair of reports published this March are potentially spelling bad news for those looking forward to retiring on their state pension in the next couple of decades.
Firstly a report for the government’s department of work and pensions, called the ‘Periodic review of rules about State Pension age’, has suggested that workers who are currently under 30 years of age might not be able to collect their state pension until the ripe old age of 70 – a far cry from the old default retirement age of 65. The combined pressure of a population age bias toward pensioners and longer life expectancy are cited as the reasons why the current system needs to change to become sustainable; these are also the reasons the compulsory workplace pension has been introduced.
A slightly more conservative view comes from John Cridland’s independent review of the state of state pensions (Smoothing the Transition); an exhaustive document that points out those currently under 45 may be required to work a year longer (up to the age of 68).
There are other changes being considered, too, such as allowing people to access their state pensions even later (in return for more funds) and removing all notion of an early access scheme.
Either way this will come as disappointing news to those currently working with optimistic notions of retiring at 67. From DPT’s point of view we’d always caution that relying on the state pension alone most likely won’t be enough to meet the lifestyle needs of retirees. A supplementary income, be it from a workplace pension, private scheme or other, will be required to boost standards of living and we’re ideally positioned to advise on the best way forward for your finances now and in the future.