Catherine Foot, Director of the Standard Life Centre for the Future of Retirement said: “The state pension remains a critical element of retirement incomes in the UK for millions of people, and the reports that state pension age increases could be accelerated are a reflection of the difficult balancing act Government faces in keeping the system affordable while people live longer, and ensuring it remains fair and adequate for those who rely on it.
“The challenging reality is that our research shows the pressures are already being felt most acutely by those least able to adapt to the current increase. Over a quarter of those directly affected by rises in state pension age say they are struggling to make ends meet day-to-day – compared to just one in seven of those above state pension age – and more than a third of people in their early 60s say they expect they will need to work for longer as a result.
"However, our modelling shows that 44% of defined contribution pension savers who could be affected by a rise in the State Pension Age to 68 are already not on track to achieve the retirement they expect. What's more, around one in seven (14%) are not confident they can work until their planned retirement age and lack significant private wealth to fall back on.
"The impact is also uneven across income groups, with twice as many lower earners expecting a significant impact on their household finances compared with higher earners. An additional consideration if these changes come to pass is the impact it will have on Gen X who would be the first affected. This generation haven’t received the full benefit of either Defined Benefit or Defined Contribution pension systems and as result, many are currently tracking towards a significant drop in living standard in retirement.
“An official review of the state pension age is underway so we should not take these reports as the outcome but the discussion about how we balance fairness and affordability of the state pension is one we can expect to hear much more on in the coming months.”
|
