Experts at the International Longevity Centre (ILC) have suggested the UK’s state pension age will need to hit 71 by 2050 to keep up with longer life expectancy.
The ILC’s Healthy Ageing and Prevention Index ranks 121 countries against six indicators: life span, health span, work span, income, environmental performance, and happiness.
It also calculates a “dependency ratio” to work out the percentage of people aged 65 or over relative to the working adult population (aged 15 to 64).
The calculations suggest the UK state pension age would need to be 70 or 71, compared with 66 now, to maintain the status quo of the constant number of workers per state pensioner.
The change could be necessary as soon as 2040 to maintain the current dependency ratio. The think tank found that the recent stalling in life expectancy during the austerity years and Covid has temporarily eased the pressure for increases in state pension age beyond 67 after 2027, but, longer term, the pressure will be on to increase it to 68 or 69.
However, researchers found that expecting people to work longer will be challenging – for example, research shows that by age 70, only 50% of adults are disability-free and able to work.
An ‘alarming’ prospect
Becky O’Connor, director of public affairs at PensionBee, said: “Such a dramatic increase to the state pension age from the current age of 66 to possibly as high as 71 is quite an alarming prospect.
“People depend on the state pension for a significant chunk of their retirement income. It’s also key to confidence in people’s ability to retire at all. Even the suggestion that people won’t get it until their 70s will make people feel more distrustful than they already do in the state pension system, and may cause actual worry and anxiety about their future.
“If people suffer ill health or face the need to care before 71, as is likely for many, they may have to give up work sooner than they can receive their state pension anyway and have to claim working age benefits for longer instead.
“While the sustainability of the state pension needs to be properly examined, increasing the age people get it may not turn out to be the cost saving a Government would hope for.”
PensionBee research has found that nearly half (48%) of UK savers believe they won’t be able to retire before the state pension age if and when it is raised to 68, as projected between 2044 and 2046.
Given these findings, it’s reasonable to anticipate even more people would be forced to work for longer if the age rises to 71 by 2050.
Perceived ideal retirement age ‘over a decade earlier’
O’Connor added: “Our research also indicated that the perceived ideal retirement age is 60 – over a decade earlier. The growing disparity between this preferred retirement age and an increasing state pension age would mean people would have to save even more through private pensions if they wanted to retire earlier. The ‘Pre-State Pension Gap’ is the total amount of income an individual requires to cover their expenses ahead of their state pension entitlement from other savings, and this would get bigger.
“There’s also a risk that people could use up too much of their private pension savings early in retirement if they had to stop work before state pension age, possibly leading to greater poverty in later old age.”
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