Pension crisis to get worse

MILLIONS of Britons face living in poverty for decades as the nation’s pensions crisis combines with a boom in life expectancy, experts warned last night.

Figures reveal that 11 million people alive today will live until at least their 100th birthday Figures reveal that 11 million people alive today will live until at least their 100th birthday

Government figures reveal that 11 million people alive today will live until at least their 100th birthday.

But analysts fear that unless the pensions system undergoes root-and-branch reform, a ticking timebomb of “penury” awaits many retirees.

Dr Ros Altmann, director general of Saga and a former Government pensions adviser, said: “Our pensions policy has been left to lag behind reality for far too long.

“The last Labour government tinkered and fiddled with our outdated, inadequate pension system and has left us with a massive crisis.

“We absolutely must not delay in making proper reform a priority. We must ensure it pays to save and that working part-time in later years is worthwhile.

“Living longer is tremendous news but if it is going to mean decades in penury, we will all suffer.”

We absolutely must not delay in making proper reform a priority

Dr Ros Altmann

Medical advances, improved diets and a stronger emphasis on health will all contribute towards longer life expectancy. More than a quarter of under 16s alive today – or 3.3 million – will live to be 100, according to analysis by the Department for Work and Pensions.

Some 5.4 million of people aged between 17 and 50 will also reach their centenary, as will 1.4 million of current 51 to 65-year-olds and more than 900,000 of the over 65s.

It adds up to a total of 11 million people living in Britain today who are expected to reach 100.

But without proper savings many of these people face having to work for longer “or a life on the breadline”.

Joanne Segars, chief executive of the National Association of Pension Funds, said: “It’s fantastic there are millions of centenarians in the pipeline but this will also raise the pressure on the UK’s already-strained pension system. An ageing population is one of the toughest challenges our society faces.

“Alarmingly, young people are putting off saving for retirement. They either can’t afford it or old age seems too far away to think about.

“Saving needs to start from an early age and it’s crucial we create a system that encourages people to do so.”

Separate research reveals that a third of workers in their 50s have no idea when they will be able to retire.

Almost three-quarters will have to continue working past their desired retirement age, according to a poll by recruitment firm Mature Accountants.com.

Research by Prudential last week estimated that two million people will have to work into their old age in order to pay the bills.

Britain’s over-complicated retirement system is also crumbling under the weight of an ageing population.

Many companies are closing their generous final salary schemes as they are too expensive to administer, while new rules will see public sector workers having to pay more into their pensions and work for longer.

In an attempt to head off an impending crisis, from next year employees will be automatically enrolled into a workplace pension scheme requiring contributions from both employer and worker.

The Government also plans to introduce a flat rate £140-a-week pension without means testing in a bid to persuade people to save more.The default retirement age, which allowed firms to force out staff at 65, has been abolished and the state pension age increased to 66 by 2020 for both sexes.

Michelle Mitchell, director of Age UK, said: “Pensions are often the furthest thing from our minds when we are younger but the easiest way to build up a good pension is to start young.

“If saving for retirement becomes an accepted part of workplace culture from a young age, then those youngsters who will see 100 are more likely to enjoy a good standard of retirement.”

Pensions minister Steve Webb said: “These figures really highlight how life expectancy in this country is changing. Millions of people will be spending over a third of their lives in retirement.

“That’s why we’re reforming the state pension system. We want to make it fair and sustainable for future generations and help millions save into a workplace pension, many for the first time.”

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