Now work until you’re 70, warns pensions expert
PEOPLE face having to work into their 70s, one of Britain’s top pension officials has warned.
Labour has already said that the official retirement age will rise to 68 from 65 for men and 60 for women by 2044.
But David Norgrove, chairman of the Pensions Regulator, said Britons would undoubtedly have to work even longer to make ends meet in their old age.
He blamed the fact that people are living longer while failing to save enough for their retirement.
“Legislation is increasing the retirement age progressively to 68 but I think it will end up higher than that,” he said.
“People are going to have to work longer. We as a nation are not going to save as much for retirement as we did in the past.”
Tory pensions spokesman Nigel Waterson blamed Labour’s tax grabs on pensions, such as Gordon Brown’s £100billion raid on share dividends.
He said: “Many people are already working beyond normal retirement age through financial necessity. They have no choice because this Labour government has decimated their pensions and savings.”
In another sign of Britain’s growing pensions apartheid, the vast majority of public sector workers will carry on retiring at 60 for decades. Most will continue to benefit from gold-plated schemes based on their final salary, now only on offer to a tiny number of private sector staff who must rely on expensive defined contribution schemes to build up a private pension pot.
Mr Norgrove said there was a lack of knowledge among the public about how to save for their pensions.
This meant the ability of the working generation to pay for the retirement of the previous one would be a big issue for the next 30 years.
In 2024 the age at which both sexes can collect their state pensions will reach 66 and in 2034 it will be 67. In another ten years, 2044, it is due to reach 68.
Using the Ministry of Pensions own online calculator, workers now aged 52 will retire aged 66, those aged 40 will retire at 67. Anyone now aged 31 must wait until they are 68, or if Mr Norgrove’s fears are realised, until they are 70.
He warned the recession could make the situation worse, as private firms going out of business take their pension schemes with them. This would mean staff having to turn to expensive and unpredictable private pensions schemes instead, while a spell of unemployment would mean workers missing months and even years of pension contributions.
He added: “Inevitably, in a serious recession, we’re going to see more companies going insolvent, but I don’t think at the moment we see this as a crisis.”
Earlier this week, figures showed that Britain’s 100 biggest companies have seen the values of their pension schemes plunge over the past year.
Research from actuaries Lane Clarke & Peacock said firms listed in the FTSE 100 index now had a combined deficit of £96billion, the largest on record, and more than double the £41billion deficit a year ago. Just three FTSE 100 companies, Cadbury, Diageo and Tesco, offer final salary schemes to new workers.
American Express has announced the suspension of pension contributions for all its UK employees for the next 18 months, saying payments had become unaffordable.
Pensions Minister Angela Eagle last night denied that there were any firm plans to stretch the retirement age to 70.
