UK issued 'crisis' warning as state pension age set to increase to 71
GB NEWS
By Patrick O'Donnell
Updated: 13/02/2024 -
The state pension age is currently set to rise to 67, then 68 under Government plans
Raising the state pension age to 71 would have “severe consequences” on the living standards of Britons in their 50s and younger, experts claim.
A think tank has proposed the state pension age must rise to 71 by 2050, amid growing life expectancy and falling birthrates, to maintain the current ratio of workers per retiree.
The UK state pension age is currently 66 and is expected to hit 67 between May 2026 and March 2028, with a further hike to 68 from 2044.
Critics are warning a hike to beyond 70 would add to the number of pensioners already suffering in poverty.
He explained: "Although this proposal could save costs, the reality is that it could have severe consequences for middle-aged people who may be required to work longer before claiming their pension.
“This change would particularly impact those currently in their early 50s and younger and would add to the number of pensioners already living in poverty, which is one in four.”
The finance expert said such an age increase would likely only benefit Britons in higher-income groups, who are less likely to be reliant on the state pension.
Mr Mountford highlighted statistics which show only the top 10 per cent of the UK’s population stay healthy into their early 70s.
He also warned raising the state pension age this drastically would be considered a betrayal by voters at any upcoming General Election.
Raisin UK’s co-founder added: “The suggested policy update is also inflexible due to its unique eligibility criteria for state pension, which is part of every worker's social contract.
“Neither the NHS nor the UK labour market is prepared for this policy, too; the former faces significant health differences across the country, while the latter is rife with ageism.
Experts have suggested the state pension age could rise to 71 in the UK.
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The current UK state pension age is 66 - one of the highest retirement ages (the age you can claim your state pension) in Europe.
But that could be about to change, with experts suggesting the retirement age could rise to 71 by 2050.
Lord David Willetts, President of the Resolution Foundation, called the current system "too generous."
His words came as the Office for National Statistics revised its inactivity rate (the number of people outside the labour force between 16-64) to 21.9% - up from 20.8%.
The International Longevity Centre's Healthy Ageing and Prevention Index also suggested if the current retirement age stays the same, there will eventually be shortages in the workforce and the argument for raising the bar becomes clear.
But what does this mean for the people of Lancashire?
According to Lancashire County Council, the difference between the male and female life expectancy at birth, in the county, is 3.6 years – Females 82.1 | Males 78.5.
If 71 becomes the new age for downing your tools, many in the region would only have a handful of years after retirement.
With the potential that people will be expected to work for longer, let's see what people in Lancashire had to say on the matter:
Gail Power said: "The experts should try and do some of the jobs that hard-working people do, apart from sitting at a desk. It's ridiculous!"
Tony Codling believes we should take notes from our European neighbours.
He said: "Should do what the French do and bring the country to a halt.”
Whilst some like Jamie Townley had a much more morbid outlook as he said: "Sound, I will tell my employer to get the casket ready, literally worked to death."
On the other hand, others said the the increase may not affect them.
"Not bothered, I'm already there," David Bower said.
Ray Turner said: "There is no retirement age. "I'm 73 still working full time and very happy I can."
UK issued 'crisis' warning as state pension age set to increase again
GB NEWS
By Patrick O'Donnell
Updated: 17/02/2024 -
The state pension age threshold is set to rise again in coming years but a recent proposal for a further hike been widely criticised by experts and GB News readers
Many GB News readers have been in uproar over a recent proposal to raise the state pension age to 71 in the near future.
Last week, The Longevity Centre recommended the state pension age was raised to this level by 2050 to maintain the number of working age Britons per retire amid growing life expectancy and falling birthrates.
This proposal was criticised by a pension expert who claimed it would have “severe consequences” on British workers aged 50 or under.
Members of the public have agreed, opposing the suggestion of hiking the state pension age to this degree in such a short space of time.
The proposal to raise the state pension age to 71 has been slammed by GB News readers
One reader highlighted that the think tank’s proposal does not take into account the millions of workers who are physically unable to work into their 70s.
They shared: “There's never a mention of those people who work manual jobs not being able to do their jobs even through their 50s.
“Men working down holes all weathers, carpenters on roofs, those working heavy work on factory lines. Some of those proposing increases in the retirement age haven't got a clue. At 50 plus, the body says no.
“It's fine for the office worker but not for manual workers outside who, in the winter, get cold through to the bone, or overheated under the sun outside in muck and dust.”
Another reader slammed the proposal as “greedy” with many households being forced to pay taxes, such as National Insurance, well into their older years.
The reader said: “All this country knows is to tax and scheme its citizens. it’s a greedy and increasingly desperate place.”
Another added: “We work until we're exhausted then we get taxed again on our money and now they want to increase the age for getting our money back?
“There will be some who don't make it to that age. Where does that money go? The government must be making a mint from this. It's daylight robbery.”
Finnish average effective retirement age rises to 62.8 years
The average effective Finnish retirement age rose to 62.8 years in 2023, an increase of more than half a year compared to 2022, the Finnish Centre for Pensions (ETK) has said.
ETK said there are two factors for the increase in the expected effective retirement age: First, the number of people starting to draw an old-age pension in 2023 fell significantly due to the increase in the retirement age, which means that not all people born in 1959 reached their retirement age in 2023.
Second, is the large indexation of pensions in 2022, which meant that people brought forward their retirement from 2023.
“The exceptionally large increase in the pension index at the beginning of last year led many people to bring forward their retirement to the year 2022. This increased the number of people who retired in 2022 and reduced the number of old-age pensions that started in 2023,” ETK development manager, Jari Kannisto, said.
In 2023, only 40,000 people drew the old-age pension, 25 per cent less than the year before.
“The number of people opting for a partial old-age pension also fell sharply. There were still more than 20,000 of them, but they are not counted as pensioners in the statistics,” Kannisto said.
The expected effective retirement age is a key indicator for pension policy. The target was set in the agreement between the social partners and the government. The agreement was first reached in March 2009. Since then, the target has been reaffirmed in Katainen’s government programme.
According to the target, the expected effective retirement age should rise to at least 62.4 years by 2025. This target has been achieved ahead of schedule. In 2023, the effective expected retirement age exceeded the target by 0.4 years.
“We are at the finish line, and a little further into the lap of honour. The increase in the effective retirement age has been surprisingly rapid. The main reason is the increase in the retirement age for the old-age pension. The good employment situation has also contributed to the positive trend. The target was already reached in 2021, but the year before last the expectation fell slightly due to the high number of new pensioners,” Kannisto said.
A third of Finns delay retirement for financial incentives
Around a third of newly retired Finnish people delayed their retirement for financial incentives, according to a study by the Finnish Centre for Pensions (ETK).
Meanwhile, just under a third felt that employer encouragement, improved leadership skills or valuing the experience of older workers would have persuaded them to continue working.
According to the survey, financial incentives were more effective amongst men, those who received a higher pension, and those who felt they have good health and wellbeing.
On the other hand, working conditions and employer attitudes were more important for women, those with lower pensions, and those who rated their pre-retirement health and wellbeing as poor.
Pre-retirement awareness of pensions was found to be “fairly high”, with almost all respondents having checked how much pension they would receive when they retired.
Nine in 10 survey respondents said they were aware of the increment for late retirement, which is paid when retirement is deferred past retirement age.
Seven in 10 stated they were familiar with the life expectancy coefficient, which reduces the amount of pension based on increases in average life expectancy.
“Almost one third of the respondents said that the pension that accrues from continuing to work or the increase for deferred retirement had encouraged them to retire later,” commented ETK economist, Satu Nivalainen.
“Slightly less than one fifth felt that the pension-reducing effect of the life expectancy coefficient had persuaded them to work longer.
“Changes in employer policies and working conditions would have encouraged continued working, particularly for those who felt that their pre-retirement working situation was not the best possible in these respects.
“Improved leadership practices would have encouraged people to continue working, particularly those who felt that their pre-retirement work situation was not well managed.”
ETK’s study also found that eight in 10 were satisfied with the time they had chosen to retire, while more than one in 10 would have liked to have retired later.
Respondents who were unaware of the impact of the life expectancy factor or the increase for deferred retirement were more likely to wish they had retired later.
“Awareness of how the timing of retirement affects the amount of the pension should be spread more widely among the age groups planning to retire,” Nivalainen said.
“In this way we could avoid situations where people retire with a full pension earlier than they would have liked due to a lack of information.”
Which European country has the best pension system and what does AI have to do with it?
European countries are some of the best places for pensions in the world, analysis shows, and AI is having an increasing impact on how each system works.
The Netherlands is top of the class when it comes to comparing pension systems around the world, according to a recent global pensions report from the Mercer CFA Institute.
The ranking looked at more than 50 indicators and compared 47 retirement income systems, covering 64% of the world’s population.
The most relevant measurements were the level of private and public sector pension benefits available, the sustainability of the system to last decades into the future and the quality of its governance.
Iceland came second, being knocked off last year’s top spot, and Denmark came third in the 2023 index.
The majority of the European countries included in the report came out with a good grade. Only a few improvements are needed in Finland, Norway, Sweden, the UK, Switzerland, Ireland, Belgium, Portugal and Germany, according to the report.
On the other hand, France, Spain, Italy, Poland, Austria and Croatia, along with the US, have major risks and/or shortcomings that should be addressed, the report said.
Coming in at the bottom of the ranking are India, the Philippines and Argentina. Along with Turkey and Thailand, they share the worst ranking, grade D, suggesting that without any improvements, there are serious doubts about the efficacy and sustainability of these countries’ pension systems.
Risks in the system
The report acknowledges that ‘retirement income systems around the world are under pressure as never before’, due to the currently persistent inflation, the rising interest rates and the geopolitical uncertainty, which inevitably affects investment returns.
“The average age of populations around the world continues to rise in many markets, mainly more mature markets,” said Margaret Franklin, president and CEO at the CFA Institute.
“Inflation and rising interest rates have created a new market dynamic that poses significant challenges to pension plans. We also see continued fracturing as it relates to globalization,” she added. “These are just a few of the increasingly complex challenges that pension funds face that impact retirees in significant ways.”
The report quotes the OECD’s latest Pensions Outlook from 2022, which recommends that policymakers across the globe go through with the necessary reforms despite the current financial and economic uncertainty, to avoid putting the well-being of current and future pensioners at risk.
The report also recommends the strengthening of asset-backed pensions (as opposed to pay-as-you-go) which could contribute to the diversification of the sources to finance retirement, making pension systems more resilient.
The impact of artificial intelligence on pension systems
Artificial intelligence should improve pensions performance by cutting costs and highlighting upcoming risks, says the report.
Additional uses for AI could include building customised portfolios and identifying market anomalies, although AI was unlikely to be able to predict market movements with accuracy, so uncertainty will remain, the report said.
“The ongoing expansion of AI within the operations and decisions of investment managers could lead to more efficient and better-informed decision-making processes, which could potentially lead to higher real investment returns to pension plan members,” said David Knox, senior partner at Mercer, according to a Reuters article.
The annual survey also pointed to risks of AI models generating fake information when used in a new context, and of cyber-attacks against pension members’ data.
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