The recently released Cridland Report into the state pension has indicated that the age at which the state pension can be drawn is likely to increase to 68 by 2037.
The review, headed by John Cridland, has looked into the various options for state-sponsored retirement and has come to the conclusion that the affordability of the state pension in the long-term is likely to be exacerbated by changing demographics – in particular an ageing population.
Life expectancy for men born in 2016 is 90.6 years and for women it’s 93.5 years and with an increase in life expectancy comes an extended healthy life period as well.
Based upon this, Cridland has said that pension age will have to increase again within 20 years in order for it to remain affordable.
He said it is also likely that the pension triple lock, which means that the state pension rises by the rate of inflation, earnings or 2.5 per cent, whichever is higher, will be removed after the end of the current parliament in 2020.
Within his report he predicts that state pension spending will fall to “6.7 per cent of GDP in 2066/67, which is a reduction of 0.3 per cent compared to the principal Office for Budget Responsibility projection. If the triple lock is withdrawn, spending will be further reduced to 5.9 per cent of GDP by 2066/67.”
In order to ensure this remains the case the report recommends that the state pension age should rise to 68 between 2037 and 2039.
He also recommends that the Government should help people access a mid-life career MOT, which should be facilitated by employers and the Government.
John Cridland, the author of the independent report, said the aim of his recommendations were to “smooth the transition for tomorrow’s pensioners and to try and make the future both fair and sustainable”.
Later during an interview with Radio 4’s Money Box programme, he said in the long-term employers’ attitudes need to change when it came to hiring and looking after older employees.
“I say that every employer should have an elder care policy so that they can demonstrate what they’re doing to help their older workers cope with the fact that many people aged 63 will be looking after their aged parent who’s 93,” he said.
“I do think in 20 years’ time the ageing society will be the dominant thing that’s being talked about by politicians. We have the chance now to plan for that future.”