UK Debt Will Push Pensionable Age to 70

According to a study published by PriceWaterhouseCoopers, an ageing population and the poor condition of the public finances will require the state pension age to be raised to 70 by the middle of the 21st century. The study said that plans to raise the pension age in three stages from 65 now to 68 by 2046 did not go far enough given the sharp increase in national debt caused by the recession. The study suggest that the public be offered a deal by the State: work longer in return for an assurance that pensions would rise in line with average earnings. He added that future governments would need to raise the pension age o 70 in order o guarantee that the earnings link would remain in place.

John Hawksworth, PWC’s chief economist, said, “Either taxes will have to rise or other policies need to adjust to deal with the higher costs of state pensions, health and long-term care, as wlel as the large debt hangover from the global financial crisis”. Mr Hawksworth said that added plans to raise the pension agent o 66 by 2020, to 67 by 2036 and to 68 by 2046 provided part of the solution to the rising cost of retirement but did not go far enough. The savings raising the state pension age to 70 would be £9 billion a year at today’s prices, enough to cover the majority of the costs of an earnings-indexed basic pension. He went onto say that this change would greatly restrict the spread of means-testing for future pensioners and avoid adding to the already large burdens of public debt and taxation on the children and grandchildren of baby boomers. The report also called for abolition of the default retirement age as an accompaniment to changes to the state pension age.

The report is entitled, “Working Longer, Living Better”. The report may be accessed at: http://www.ukmediacentre.pwc.com/News-Releases/PwC-says-reset-retirement...

Source: The Guardian, 25th February 2010