Pensions

what everyone under 50 needs to know

What’s gone wrong

When the coalition Government ramped up the retirement age changes, they were accused of not giving women enough time to prepare and not communicating the changes well enough to those affected. This bred the “WASPI “campaign – Women Against State Pension Inequality.

This generation of women, who saw their pension age rise from 60 to 64, 65 or 66, say that they face financial hardship as they didn’t have enough time to make alternative plans. The cut-off points seemed unfair to many, too, with friends just a year younger getting to retire more than three years earlier.

Will the goalposts move yet again?

One area for concern is that the Government said it will not pass law on these changes until 2023, meaning that while the proposals are there, the legislative can has been kicked down the road for a future government to deal with.

Under today’s fragile leadership the laws might not be passed. Labour has been opposed to pension age increases, and a current slim Tory majority might mean it would fail.

Other countries provide alarming examples of how state pension planning can go awry, causing damage to economies and even inflaming unrest. Most experts in long term savings – and public finance management – are eager for decisions such as these to be removed from a party-political context.

Brazil is one example of a generous – but failing – state pension system which is having an adverse impact on the public purse.

Currently everyone has the right to retire in their early to mid-50s, but the Brazilian government is trying to raise this to 65 for men and 62 for women – in the face of considerable public resistance.

Whether Britain’s state pension age increases further depends partly on how life expectancy changes in that time. In fact, the latest figures show that life expectancy could be falling, after a period of consistent multi-year increases.

Tom McPhail, head of policy at broker Hargreaves Lansdown, said: “For anyone yet to reach age 47 there is still time to adjust their retirement plans by looking to contribute more or look to change where they invest.”

He is calling for an independent body to oversee changes.

“We need a national savings strategy to help people save and invest for their future,” he said. “A good starting point would be for the government to look at a savings commission.”     

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