We seem to be having the same pension headlines in…
Back in the early summer, Lord Adair Turner, former chairman of the FSA and Pensions Commission, proposed raising the state pension age to 70 by 2030. This would affect those workers who are currently aged 56 and under and who would need to work even longer before gaining entitlement to their state pension. Lord Turner was speaking at a private event and suggested proposals for introducing earlier access for those in physically demanding jobs or those on low incomes.
Currently, the timetable for raising the state pension age eligibility stops at age 68. We’ve reported in earlier articles that the major reason for changing the state pension age eligibility is the current cost of state pensions. The new “flat-rate state pension” which was recently introduced will eventually put a cap on the amount of state pension entitlement and workers will no longer be able to build up the generous state pensions which have been built up through contracting-in. The long term costs of the state pension are already considered unsustainable with the government estimating pension costs at around 8.5% of GDP*. Recently, Ross Altman, the former pension minister, caused a great deal of consternation when she suggested that the expensive triple lock guarantee should be dropped by government to save billions of pounds. Pensioners have been particularly badly affected by the financial crisis of 2008 whereby extremely low interest rates have had a devastating effect on annuity rates and also on deposit accounts, forcing some pensioners to take much more risk than they want to with both their pensions and investment/savings. Losing the triple lock would be yet another blow and would make life very hard for many elderly pensioners on low incomes.
In August, a report of the interdepartmental group on Fuller Working Lives stated that the retirement age may need to be increased and I understand that John Cridland was appointed to chair a new governmental review into the State Pension Age by Ross Altman back in March. Individuals, charities, businesses, research groups and all other interested stakeholders are invited to share their views on the State Pension age by emailing firstname.lastname@example.org.
So it appears that changes are probably inevitable and we might even find that it’s not just state pension age that is affected but new changes might be introduced which will consider people’s wealth, job or life expectancy. This situation, I think, is bound to cause controversy on the grounds of fairness and this would be both contentious and complicated to administer.
WASPI (Women Against State Pension Inequality) has criticised successive governments for failing to properly inform those who will be affected by State Pension Age changes. So, once again, there may be changes affecting those who are creeping closer to retirement and it would appear that you’ll need to work hard to ensure that you understand the changes and how they might affect you. After all, for many people, the state pension will form the basic building blocks of their retirement planning and to find that everything has changed significantly could mean great financial difficulty, probably at time when you’re least likely to be able to make changes to deal with it.
Please contact Helen Mulvaney of Richmond Independent for further details. Tel 01395 512166
Source * Government Green paper
Previous Post: Dividend income in the firing line!