There have been many headlines in the press this week on the state pension age; ‘Now it’s work to 75’ the Daily Mirror reported, the Financial Times went with ‘Pensions study gives ‘work until you drop warning’ and the Guardian reported ‘State pension age could rise faster than expected’ say experts’.
The flurry of headlines has had colleagues in different departments asking the Pensions Age team if it really is the case. Do we really have to work that long? Are we ever going to be able to afford to retire? Unfortunately for them, the answer has been ‘yes and errrrmm probably not’.
It all follows the news that the government has appointed the former director general of the CBI John Cridland CBE as the independent reviewer of the state pension age. He is due to report to the Secretary of State for Work and Pensions before May 2017, to allow time for the government to consider the recommendations.
Labour and financial experts warned that this could mean the Conservative government is planning to increase the state pension age faster than the current rate. At present, the state pension is set to increase to 67 by 2028 and 68 by 2046. However, as The Pensions Act 2014 sets out plans to review the state pension age at least once every five years, many fear it could increase much more quickly.
Those hoping for a gradual increase because the rate at which rising longevity has slowed, should note that the review will “take into account a range of factors relevant to setting the pension age”. There really is no hope.
All this, of course, relates to the state pension age. If we save enough we could all take our private pension and retire earlier. At the moment we can take it at 55, but the government is already planning to increase it to 57 by 2028. It also has plans to link it to ten years behind the state pension age.
But no need to worry, if we save enough we can probably retire at 65 and enjoy cruise life. I’m already eyeing up a three month round the world trip for 2055. Convinced? Neither am I.
We’re constantly told we’re not saving enough into our DC pensions; the government will get us up to 8 per cent by 2018, but the recent Independent Retirement Income Review recommended the government sets a target rate of 15 per cent. It doesn’t take a trip to Mystic Meg to find out this retirement idea probably isn't going to work out.
The situation is awful, and yes, it has got us all talking, but what impact does it have on our decision to save more right now? At the rate at which the state pension age is increasing, it will be half a century until I can retire.
It’s far too many years away for me to fully comprehend how having to work for that long will really affect me. The best I can do is look at relatives in their 60s, with health niggles that age brings, and know that having to continue to work until the age of (possibly) 75 isn’t going to be fun.
So will I increase my pension contributions because of all this? No, because I’m a millennial and I’d rather spend my money on a holiday, that’s what the Financial Times says anyway. In all truth, of course I want a holiday, but I’m also paying a ridiculous amount to my landlord in rent whilst trying to save for a house. I'm aware our elders might think we all sound like a stuck record, but it's true.
Even if the age of retirement was still 60 (as it was for women) it would still be too far away for me to fathom. I know I'm going to have to work until I'm really old, but what good would it do me to worry about it? Right now, I'm not in a financial position to increase my contributions. So retirement? Forget it.