Britons will in future be forced to wait until their 70s to collect their state pensions after the Government confirmed a link to life expectancy is imminent. The pension age is already set to rise to 66 by 2020 for both men and women, before hitting 67 by 2028. Now the Government will use an Office for Budget Responsibility report, due to be published this summer, to create a solid link between the state pension age and rising life expectancy.
It is likely see today's 33 year-olds wait until 73 before they get their state pension, experts said. Andrew Tully, of pensions firm MGM Advantage, said: ‘This should serve as a wake-up call for many people. If people want to stop work at an earlier age they need to review their retirement planning, and take control of their future.’
In his Budget speech, Chancellor George Osborne promised an 'automatic review that keeps up with increases in longevity'.
The Budget document expanded on this saying: ' Budget 2012 announces that the Government will commit to ensuring the State Pension age is increased in future to take into account increases in longevity and will publish proposals at the time of the Office for Budget Responsibility’s 2012 Fiscal sustainability report.'
Experts have long warned that more pension age rises are 'inevitable' as Britons spend longer in retirement. Tom McPhail, of financial adviser Hargreaves Lansdown, said: 'In 1948 when current form of state pension was introduced with a retirement age of 65, life expectancy was 66.'
Today life expectancy at birth is around 78 for men and 82 for women, with the cost to the Treasury ballooning as the baby boomer generation of those born in the aftermath of the Second World War reaching retirement. According to the Office for National Statistics, life expectancy has increased by a total of 5.3 years over the three decades since 1981.
If that trend continued and was used by the Government as a basis for pension age increases, young Britons today will face 60-year working careers, according to calculations by pensions firm Standard Life. The latest estimates suggest that by 2056, the life expectancy for a man and woman living in England will be 84 and 89 years respectively.
It means today's sixth-formers could be forced to work until they're 77 under the new plans. Standard Life says that if the pension age rose from now in line with the change in life expectancy over the past three decades, a seventeen-year-old would not be able to retire until 2071, when an A-Level student born in 1995 would be 77.