Following details of forthcoming tax increases the Queens Speech yesterday also gave the news that the national age of retirement will soon go up, possibly to the age of 70.
A Pensions and Savings Bill is set to come into play that will bring new rules to the UK state pension. Where pensions usually increase with inflation, from 2012 a basic state pension will increase in line with earnings instead, which experts estimate could lead to the taxpayer stumping up £2billion extra per year.
In a bid to meet these increased costs the age of retirement would have to rise sooner than planned. The existing arrangement has retirement age going up to 66 by 2026 however the Coalition Government is looking to hasten this arrangement.
Whilst a clear decision has yet to be made experts feel that the age rise is inevitable. Charles Cotton of the Chartered Institute of Personnel and Development said that the earnings increase would ensure that the age for state pensions would be forced to go up “sooner rather than later”.
John Ball of consultancy firm Towers London said: “While attention has focused on how soon the state pension age will rise to 66, the bigger question is what happens afterwards. Rather than rising to 68 by 2046, we could see it going up further and faster.” He added that: “The logic used to justify a state pension age of 68 by 2046 could now justify a state pension age of 70 by then”.
If the fast-track age increase to 66 were to go forward, for men 2016 and for women 2020, it would mean that around 4million people would be forced to work beyond the age they had previously thought.