An earlier than expected state pension age increase could leave millions of Britons struggling to reach the “minimum” standard of living, according to new research.
Analysis from financial services firm SunLife is warning the public of the potential consequences that could arise if the Government opts to bring forward such a hike.
As it stands, the state pension age is currently 66 years old at which point retirees will be able to access their payments from the Department for Work and Pensions (DWP).
Currently, the Government is set to raise the retirement age threshold from 66 to 67 between 2026 and 2028.
Another review within two years of the next Parliament is scheduled to examine recommendations for an earlier increase to 68.
In March 2023, an independent review of the state pension age by Baroness Lucy Neville-Rolfe recommended an increase to 68 between 2041 and 2043.
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The state pension is expected to be raised in the near future
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Recently, the London School of Economics’ (LSE) Centre for Economic Performance recommended that the state pension age be increased to 68 “as soon as possible”.
Over 50s experts are sounding the alarm this will do more harm than good for millions of pensioners up and down the country.
Mark Screeton, the CEO of SunLife noted that only one in four retirees are relying on the state pension alone, based on the Life Well Spent report.
Some 28 per cent of over 50s have reportedly no pension savings apart from the DWP’s official retirement benefit.
Screeton explained: “According to Retirement Living Standards an individual needs an annual income of £14,400, for a ‘minimum standard of living’ while for a ‘moderate’ standard of living, an income of £31,300 is needed.
“This means that even after April’s 8.5 per cent hike, the current new state pension still falls well short of what is needed for pensioners to get by, let alone live well
“Therefore, if the state pension age were to rise to 68 by the early 2030s rather than 2044-46 as currently planned, millions could be left struggling with no private pension savings to fall back on.”
According to the retirement expert, despite some older people being able to work until the age of 68, some Britons will face hurdles when it comes to remaining in the workplace past 50.
“Furthermore, our research shows that 59% of grandparents are relied upon to provide free childcare for their grandchildren, saving families a combined £90bn in childcare costs,” he added.
“If the state pension age were to rise, it could have a knock-on effect on families across the UK who will no longer be able to rely on grandparents to help out as they themselves could still be working.
“Arguably, the pension age does need to rise in line with life expectancy, but not before 2044. By 2044, pensions auto enrolment will have been in place for more than 30 years, meaning far fewer people will be relying on the state pension alone.
“Assuming the age for accessing a private or workplace pension does not change significantly – it is currently 55 and is due to increase to 57 by 2028 – this should mean more people will be able to retire earlier than 68 if they wish.”
