The possibility of an increase in the state pension age has prompted concerns that savers will face a shortfall in their pension savings, with industry research showing that 48 per cent of UK savers will not be able to retire before state pension age if it is raised to 68.

A government review of the state pension age is currently underway, looking at whether the state pension age should be raised from 67 to 68 in 2034 rather than between 2044 and 2046 as originally planned.

However, industry experts have raised concerns about the impact of increasing the state pension age earlier than planned, with analysis from Interactive Investor revealing that individuals could need to up their savings to bridge the gap until private pensions access.

In particular, the analysis found that a premature increase in the state pension age could mean that workers wanting to retire at 57 would require an extra £38,000 in savings to bridge the gap until they can access their private pension pot at 58 to ensure a comfortable retirement.

In addition to this, savers targeting retirement at 57 would require an extra £13,200 and £23,760 for a minimum and moderate retirement respectively.

Interactive Investor explained that, from 2028, the government plans to increase the normal minimum pension age in lockstep with the state pension, warning that changing the private pension minimum age to 58 from 2034 only gives savers 11 years to adjust their plans or invest on the basis of the new rules.

Interactive investor personal finance editor, Alice Guy, commented: “The increasing private pension age will make it significantly harder to retire early.

“People make retirement plans decades in advance and rely on the current rules for their planning. Changing your retirement plans isn’t always easy – people set their heart on a certain retirement date and press on, perhaps in a tiring role or with health problems, with that date in mind."

PensionBee also raised concerns around the potential shortfall savers could face as a result of an increased state pension age, revealing that an extra £130,000 in retirement income if someone retires at age 60 rather than 68, and £85,000 if they want to retire at age 63.

However, the provider warned that the extra savings needed to retire early may be out of reach for an ‘average’ worker, with research from PensionBee revealing that almost half (48 per cent) of UK savers think they will not be able to retire before state pension age if it is raised to 68.

This represents an 8 per cent increase on the 40 per cent of people who stated they would not be able to retire before the state pension entitlement age as it is now.

PensionBee director of public affairs, Becky O’Connor, stated: “The government may want to end the great retirement, but the truth is that retiring before state pension age is pie in the sky for many.

"Four in 10 workers think they wouldn’t be able to retire before state pension entitlement age, suggesting that bringing forward the increase to age 68 would not merely be a costly inconvenience for more people, it would effectively force more workers to carry on working until the point they can draw their state pension.

“The research also reveals that many people overestimate the age to which they will remain healthy, perhaps indicating that retirement is not commonly-viewed as a way to protect people in ill-health from the demands of work.”

Share Story: