Working-age Britons face getting a lower state pension and having to wait longer to get it because the current state pension system âcanât copeâ with an ageing population, an expert has warned.
Chief executive of life insurer Phoenix Group Andy Briggs is urging Britons to prepare for the future now, as he warns dramatic reform could lie ahead.
Mr Briggs said the UK state pension system will soon become unsustainable, sparking calls for individuals to set aside money for the future while they can.
âThe state pension just canât cope in the way that it was originally designed to do,â he told The Telegraph.
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âEffectively, state pensions are going to have to be paid later and at a lower level, and people are going to have to make greater personal provision.â
The state pension was first introduced in 1948, with a state pension age of 65 for men and 60 for women.
Mr Briggs pointed out that at that stage, life expectancy for men was 67. He added: âSo the whole thing was designed with a life expectancy in retirement of two years.â
The state pension age has since risen; itâs now 66 for men and women and hikes to 67 then 68 lie ahead.
The average life expectancy for someone aged 66 now is 85 years for a man and 87 for a woman.
Furthermore, the number of over 60s across the globe will double between now and 2050, the World Health Organisation (WHO) has warned.
Mr Briggs said itâs not likely the UK state pension age would be hiked by seven or eight years, which will cause âpressureâ on the state pension.
He added: âEither that, or the tax rates for those working will have to go up quite materially.â
A think tank recently warned the UK and other ageing populations will need to hike their state pension age to 71 by 2050 in order to maintain the number of workers per retiree.
The UK state pension ‘can’t cope’, an expert has warned
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If the UKâs working adult population was defined as 20 to 64 years, to account for time spent in full-time education, the state pension age might need to reach 70+ as soon as 2040 to maintain the current dependency ratio, the International Longevity Centre warned.
Becky OâConnor, director of Public Affairs at pension provider PensionBee, said âsuch a dramatic increaseâ to the state pension age was âquite an alarming prospectâ.
She said: âEven the suggestion that people wonât 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.
âIf 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.
âWhile 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.â
William Turner is a seasoned U.K. correspondent with a deep understanding of domestic affairs. With a passion for British politics and culture, he provides insightful analysis and comprehensive coverage of events within the United Kingdom.
