Rachel Reeves has warned that the state pension must be ‘affordable’ amid concerns that the younger generation may not receive it until they are 74.
The Chancellor said increases in life expectancy have to be taken into account after ministers launched a review.
Concern has been raised about the sustainability of the triple lock, which means the state’s old-age payouts increase by whichever is highest out of the rates of inflation, earnings, or 2.5 per cent every year.
As the ageing population puts additional strain on public finances, the OBR watchdog issued a warning earlier this month that the policy may end up costing three times as much as initially anticipated by the end of the decade.
The pension age is already slated to increase to 67 between 2026 and 2028.
Presently, the legal position is that it will reach 68 from 2044-46.
However, a previous report by former Tesco director Baroness Neville-Rolfe warned that it might need to be accelerated.
With the triple lock in place, there are estimates that the level would have to hit 74 by 2065–67 in order to maintain spending at about 6 per cent of GDP.
Ms Reeves told reporters this morning: ‘We have just commissioned a review of pensions adequacy, so whether people are saving enough for retirement, and also the state pension age.
‘As life expectancy increases, it is right to look at the state pension age to ensure that the state pension is sustainable and affordable for generations to come.
‘That’s why we have asked a very experienced set of experts to look at all the evidence.’
Lady Rolfe has proposed establishing a rule that Britons receive pensions for 31 per cent of the average life expectancy.
Those principles would have significant implications for younger workers, with the Tory peer saying that the retirement age should reach 68 between 2041 and 2043.
It could then reach 69 between 2046 and 2048 – with those projections indicating that it would need to hit 70 in the early 2050s.
That would be when people born in the 1980s would be looking to bow out of the workplace.
Dr Suzy Morrissey has been tasked to look at the ‘factors government should consider’ on state pension age.
Additionally, a report on the percentage of adult life in retirement has been requested from the Government Actuary’s Department.
Despite worries about allowing people enough time to get ready for changes, it is acknowledged that final choices are very unlikely to be made until the next Parliament.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: ‘There will be many factors that need to be assessed during this review of the state pension age.
‘One of the most important will be healthy life expectancy, which, according to the latest data, hovers in the early 60s.
‘This means the reality is that many people will face real difficulties in continuing to work until their mid-to-late 60s and could face a sizeable income gap while they wait to receive their state pension.’
Rachel Vahey, head of public policy at AJ Bell, said: ‘An ageing population places an increasing burden on taxpayers, with state pension costs rising and fewer working-age taxpayers to cover the cost.
‘Future governments will hope that an improved economy and growing tax receipts will help alleviate some of the pressure. But that can’t be guaranteed, and there needs to be a credible plan for maintaining affordability.’
The Government says 45 per cent of working-age adults are putting nothing into their pensions.
Work and Pensions Secretary Liz Kendall said yesterday she was turning to the Pensions Commission, which last met in 2006, to ‘tackle the barriers that stop too many saving in the first place’.
The previous commission suggested automatically enrolling people in workplace pensions, which has seen the number of eligible employees’ savings increase from 55 per cent in 2012 to 88 per cent.
DWP analysis suggested 15 million people were undersaving for retirement, with the self-employed, low-paid, and some ethnic minorities especially affected.
About three million self-employed people are said to be saving nothing for their retirement, while only a quarter of people on low pay in the private sector and the same ratio from Pakistani or Bangladeshi backgrounds, are saving.
There is a sizable gender pension gap for women, with those who are nearing retirement receiving just about half of what males may anticipate.
The commission will be conducted by Baroness Jeannie Drake, a member of the previous commission, and report in 2027 with recommendations that extend beyond the next election.
Laurence O’Brien, a Senior Research Economist at the IFS think-tank, said: ‘Despite the success of automatic enrolment in increasing the share of employees saving in a workplace pension, our recent research has shown that, among employees saving in a defined contribution pension, almost seven million appear on course for a disappointing income when they reach retirement.
‘Alongside this, only one in five self-employed workers are currently saving in a pension.
‘In the face of these trends, the launch of a new Pensions Commission, focusing on the adequacy of retirement incomes, is welcome.
‘However, any reforms to boost pension saving must be carefully targeted to minimise falls in take-home pay among those who can least afford them.’
State Pension is not a benefit; they say it’s a benefit because you paid into a system that you then have to rely on the government to give you when you become pension age, and now they can even tell you when you can have it, yet you paid into it with your hard-working money with the assurance that it would be paid to you when you turned 60 years old, they then changed that assurance because they took all your hard earned money you paid in on something else, but it was not their money to spend.
I’d like to see Rachel Reeves work on a building site until she’s 74 years old. The UK has become a joke, and all they want you to do is work until you drop dead, because then they don’t have to give you a penny of your money that you are entitled to, but you worked for it. In fact, I’m sure they would like to see all elderly people euthanised.
Let’s see her actually work; that would be a good start!
So, why didn’t the government save the money people paid in National Insurance? Because they could see a good money maker and were probably rubbing their hands together when it was set up
The goal of the State Pension was to give retirees a reliable source of income.
It was supposed to provide a safety net against poverty in old age, and the State Pension Age was 60 years old for women and 65 for men.
Then, in 2016, it started being classified as a benefit under Section 1(1) of the Pension Act 2014, and by classing it as a benefit, they can now tell you when you can have what you worked for all your life.
However, if it’s now classed as a benefit, surely with that comes the right to Housing Benefit and free NHS Dental Health Care, which people on State Pension do not get, yet if you get Pension Credit you do get these freebies, and rightly so, you worked hard all your life, and the cheek, if you actually do get to 100 years old the King will send you a congratulatory message to wish you a Happy Birthday, or is that really a message to say what a mug you have been?
THE MONTHLY MOSQUITO 