27 August 2019
A leading think tank, the Centre for Social Justice, has proposed raising the state pension age to 75 from 2035. Although the government has rejected the idea, the very fact that it was seriously considered shows that there’s rising concern that people are not saving enough for their retirement as life expectancy increases.
The retirement age is already going up from 65 to 66 next year, to 67 in 2026 and to 68 between 2044 and 2046. When the state pension age of 65 was introduced in the 1940s, life expectancy was 66. Nowadays, men and women can expect to live into their 80s or longer, but pensions are not keeping up with the rising cost of an ageing population.
The problem affects millennials, especially women, renters and the self-employed. The Resolution Foundation says a third of millennials will be renting all their lives, so young people also need to save enough to continue paying rent into their 80s and beyond. Many women go part-time to take care of children and to save on childcare costs, but this means their pension contributions will decrease or even stop altogether, making it even harder to increase their retirement savings.
“We surveyed 400 of our Members recently and found that almost one in six had no pension provision apart from the state pension.
Only 14% of self-employed people pay into a pension scheme, according to the Office for National Statistics. Research by investment firm Fidelity shows that two thirds of 23-38 year olds who work for themselves do not have any form of pension.
As a result, Scottish Widows say that one in five (20%) of those earning between £10,000 and £20,000 per year believe they will never be in a position to retire.
Hilary Hall, NHF/NBF chief executive, said, “We surveyed 400 of our Members recently and found that almost one in six had no pension provision apart from the state pension. Even if they have a pension in place, they’re planning to delay retirement for as long as possible to keep earning. Unless they can increase their pension savings, the reality is that many people in our industry will be working well past the age of 65. For young people, especially women, renters and the self-employed, retiring at 75 may not be as far-fetched as it first seems.”