Published On: Mon, Feb 5th, 2024
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DWP state pension warning that minimum age will rise in change branded ‘alarming’ | Personal Finance | Finance

People hoping to retire with their state pension may soon be forced to keep on working for several more years as the state pension age could rise to 71.

A report from the International Longevity Centre has warned the state pension age may soon need to be hiked to 70 or 71 due to the ageing population, as a great proportion of the population claims the support.

The study found if the UK’s working population is defined as those aged 20 to 64, to account for time young people spend in full-time education, the state pension age may need to increase to 70 and over by 2040.

The researchers warned the problem of a lack of working age Britons to fund the state pension is being exacerbated by the fact more people are leaving the workforce before they reach state pension age.

The group said: “Poor health is one of the key reasons for this and is one of the greatest barriers to economic prosperity faced by the UK today because it lowers economic output and increases taxes.

“Additionally, a smaller working population and a large economically inactive population create huge labour shortages which must be filled by migrant labour which creates additional problems.”

Becky O’Connor, director of Public Affairs at PensionBee, warned it is an “alarming prospect” that the state pension age could increase to 71.

She said: “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.”

The state pension age is currently 66 for both men and women and is set to gradually increase to 67 between 2026 and 2028.

It will then increase in stages to 68 between 2044 and 2046, in accordance with current legislation.

But this second increase may change, as the policy is looking at bringing forward the timetable for the increase from 67 to 68.

The Government is set to make an announcement on this matter within two years after the General Election.

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