The pension age for both men and women will rise to 66 by 2020. Chancellor George Osborne confirmed today that all Britons under 57 will have to wait until age 66 before they receive their state pension.
A Treasury statement released after Osborne’s speech to the House of Commons said: ‘Following the faster increase to 66, the Government is also considering future increases to the State Pension Age to manage the ongoing challenges posed by increasing longevity, and will bring forward proposals in due course.’
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Is that the worst of it?
Not likely. Ministers are also understood to have examined the possibility of extending the pension age to 70 and even higher in the following decades.
Work and Pensions Secretary Iain Duncan Smith has suggested the age at which people can claim the state pension could be ‘indexed’ to increasing life expectancy, as in Denmark.
Why is all this happening?
To be blunt: Our heavily indebted Government (which owes about £890billion) can no longer afford to support Britain’s ageing population. UK life expectancy is rising rapidly as we live healthier lifestyles and enjoy better medical care.
The average British male now lives until 77 years, and female until 81. Back when the state pension age was set at its current 65 level in 1925, only a third of men and 40 per cent of women were expected to live to see their 65th birthday.
It means our taxes are being used to fund an ever-growing population of older, retired Britons. Official statistics project that by 2034 the number of people aged 85 and over will be 2.5 times larger than in 2009, reaching 3.5m and accounting for 5 per cent of the UK population.
In the Spending Review today, Chancellor George Obsorne said: ‘Raising state pension age is what many countries are now doing. It will save over £5billion a year.’
Any positives to soften the blow?
Yes. One is that axeing of the Default Retirement Age (DRA). This allowed employers to force staff to retire when they hit 65.
A Government consultation is currently in-process, with the results set to be announced before Christmas. Expect the DRA to disappear completely, fostering an older working population and reducing the state benefit burden.
Anything else?
Currently the full basic state pension is £97.50. That can be topped up with pension credits to about £130. But is not enough and one would still left in abject poverty. Currently, around 2million retired people live below the poverty line.
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