Interactive Investor

Work till you drop: government minister issues state pension warning

12th May 2023 12:25

by Alice Guy from interactive investor

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The Secretary of State for Work and Pensions has warned that the next government may have to bring forward a rise in the state pension age to 68.

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Interactive investor’s head of pensions and savings has responded to Secretary of State for Work and Pensions Mel Stride’s comments on the state pension age and a possible 2% cut in income tax if more Britons return to work.

Alice Guy says: “Mel Stride’s ominous warning suggests that workers as old as 55-56 could see their state pension age rise to 68 years old, slashing £13k from their retirement budget. If a decision is made after the next election, it could mean the state pension age is raised to 68 as early as 2035, giving workers only 10 years’ notice of a change.

“The government needs to square the circle of rising life expectancies but fewer older workers. The state pension is becoming ever more expensive but raising the state pension age isn’t magically persuading people to work for longer. Many will see this as a push towards working till you drop. The constant raising of the state pension age could wipe out retirement altogether for too many people, and that’s a national tragedy.

“No amount of nagging will persuade those who’ve given up work due to their personal circumstances, many facing health problems or having caring responsibilities. The harsh reality is that many older workers simply can’t work or have chosen a lower level of income in exchange for more freedom.

“Dangling a 2% cut in income tax isn’t going to persuade people back into work, because people don’t make decisions based on the whole country. They decide what’s best for them and their family.

“The reality is that if you want to have a comfortable and happy retirement you may well need funds, but you also need your health.

“interactive investor’s 2022 Great British Retirement survey revealed that only one in three (34%) 56-to-65-year-olds still work full-time, close to half as many as those under 56 (60%). And more retired people have health conditions or illnesses: nearly half (49%) retirees have physical or mental health conditions or illnesses lasting or expected to last 12 months or more in contrast to 29% of non-retired respondents.

“If the state pension age is raised to 68 in 2035, someone currently aged 55 will lose around £13,443 of state pension income. Even with 10 years’ notice, they will need to save an extra £90 per month in their pension for 10 years to cover the shortfall (assuming 5% investment growth).”

State pension age rise to 68



Current age of workers affected



State pension lost



Extra monthly saving needed over 10 years



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