Government's pension reforms under way
Published on 10 May 2012 11:30 AM
The Government will plough on with changes to the 'complicated' state pension system in a bid to encourage British earners to save more money for their retirement.
A single tier pension scheme is set to replace the current way workers set aside cash under the new Pensions Bill. Also between 2026 and 2028 the retirement age will be increased to 67.
It is believed that leading ministers outlined the pension reforms because working people are not saving the money they need for retirement due to the 'complex' system. But it also indicates that the age at which earners retire will continue its upward trend as the pension system is continually amended to reflect the nation's rising lifespan.
'(We are committed) to ensuring that the state pension age is increased in future to take into account increases in longevity,' said a Government paper.
John Lawson, head of pension policy at Standard Life, said: 'If after 2026 the state pension age increases in line with our changing life expectancy, we could expect that someone who is currently 37 won't be able to start drawing their state pension until they are 70 and someone who is 21 won't receive it until they are 75.
'This means that children born in 2012 are unlikely to get their state pension until 80, if life expectancy at retirement rises in line with the last 30 years.'
Michelle Mitchell, Charity Director at Age UK says: 'We are pleased that the Government is committed to introducing a flat rate state pension in the future. However, it is important that the Government does not lose sight of the needs of current pensioners, 1.8million of whom are living in poverty and will not benefit from these changes.
'We recognise that as life expectancy increases it is reasonable to consider increases to State Pension age and longer working lives. However, average life expectancy must not be the only factor that is considered as at the moment the huge disparities in healthy life expectancy across the country means that the poorest socio-economic groups will be required to sacrifice proportionately more of their retirement.'
Copyright Press Association 2012