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State pension age rise to happen sooner

by: IFAonline
  • 05/12/2013
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State pension age rise to happen sooner
The government has announced it could bring forward plans to increase the state pension age (SPA) for people currently aged in their 40s or below.

Chancellor George Osborne will announce in Thursday’s Autumn Statement – a precursor to next year’s Budget – that the date when people must be 68 to draw a state pension could be brought forward by about 15 years to the mid-2030s.

The SPA could rise again, to 69, by the late 2040s, the government said in a statement.

People currently in their 20s may have to work until they are 70 before they are eligible for a state pension, experts claim.

The changes reflect increasing life expectancy. The government had already announced the SPA would increase to 66 by 2020 and 67 by 2028 but, whereas the jump to 68 was scheduled for some time between 2044 and 2046, that will now be brought forward.

Tom McPhail, head of pensions research at Hargreaves Lansdown, welcomed the move.

“[The move to 68] was already widely acknowledged as being too late and too slow,” he said.

“Given current low levels of private savings and improvements in life expectancy, it was unrealistic for those in their 40s and younger to expect that they wouldn’t see their SPA rise again above age 67. In reality, many in work today are already unlikely to be able to afford to retire until their 70s, irrespective of when their state pension falls due.”

The government will say that people should spend on average no more than one-third of their adult lives in retirement, the BBC reported.

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