Young people often don’t think too much about pensions when there are so many other, more immediate, things to be concerned with such as getting on the property ladder, forging their careers or starting families.
But changes to state pensions mean that workers in their twenties and thirties now cannot be entirely certain when they will be able to claim their state pension: it could be as late as in their seventies, and so Liberal Democrat minister Steve Webb has warned young workers to start planning for their retirement.
Mr Webb claimed that it would be unfair to give young people an exact age for retirement since this could potentially change in the coming years. He said: “I don’t think any government can be precise. The alternative is spurious accuracy, to say exactly what their pension age will be.”
He added: “Everyone over 52 was already certain. As of yesterday, we’ve fixed it for [more people]. So anybody halfway through their working life knows for certain. For those in their twenties and thirties, clearly people are working longer. It’s a reasonable thing to expect.”
The latest changes to state pension age were announced this week. While those retiring at the moment can take the state pension from the age of 65, by 2020 the age will go up to 66. Workers aged under 52 can expect to claim their state pension aged between 66 and 67 depending on when they were born.
From 2044, the retirement age will increase to 68 years old. This will affect workers who are currently younger than 34 and eight months. Although it is likely, according to Mr Webb, that this retirement age will come sooner than 2044 because of ever-increasing life expectancies.
Mr Webb explained it was difficult to say what might happen “half a century ahead”. He said: “Who knows what a few more decades of lifestyle changes will bring.”
Since the state pension age is so uncertain for young workers and some ten million people are not saving enough money for their retirement, Mr Webb warned: “Building up bigger private savings is vital.”
So it seems that younger workers must either try to strike a balance or choose between saving for a home and family life and planning for their retirement.
Are you concerned about your pension? Do you think it’s fair that young people will have to work until later in life to receive their pension? Leave a comment and share your thoughts.
Read more on the story (The Telegraph)
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