Pensioners to be ‘plunged into poverty’ by new retirement age change
Martin Lewis warns pensioners missing out on money
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Employees aged 54 and under would be forced to delay quitting their jobs under plans floated by the Treasury.
Chancellor Jeremy Hunt’s team has examined bringing forward a planned rise in the pensionable age 68 by more than a decade to save billions.
But Age UK said making 50-somethings wait longer for their pension would leave many struggling to make ends meet in later life.
Charity director Caroline Abrahams said: “We feel strongly that there is no justification for raising the state pension age at the moment, especially as we know that the people who will lose out the most are those unable to work due to ill health and caring responsibilities, as well as anyone who becomes unemployed in mid-life and then finds it impossible to get another job, due in part to a lack of training opportunities as well as rampant ageism in the labour market.
“As things stand, any decision by the Government to make today’s fifty-somethings wait longer for their state pension will consign hundreds of thousands of people to a difficult and impoverished later life.”
Prime Minister Rishi Sunak is facing a Cabinet split over when to make changes to the retirement age.
Raising the point the state pension can be claimed quicker than planned would save the government billions of pounds.
Ministers are required by law to review the state pension age regularly and the deadline for the latest decision is May.
An increase to 68 is currently planned for 2046 and the Treasury wants that to be brought forward to 2035.
Work and Pensions Minister Mel Stride, who is responsible for the decision, is fiercely opposed to the move and believes it would leave millions of employees in their late 40s and 50s having to hastily revise their financial plans.
He is understood to be aiming for 2042 instead.
A DWP source said: “The Government is currently undertaking a review of the state pension age as it is legally obliged to do, taking into account two independent reports and a wide range of evidence.
“When reaching his recommendation on the state pension age moving to 68, taking into account all the latest evidence, including projections on life expectancy, the Secretary of State is absolutely clear on the need for fairness for our pensioners across the country to be at the forefront.”
Government insiders believe the Treasury is trying to flex its muscles ahead of the budget on March 15 and has “jumped the gun” by raising the prospect of speeding up the plans.
Treasury sources insisted the Chancellor has not set out his preference because the review is yet to report back.
They said the pension age has not featured in any discussion about the March 15 budget so far.
The government is weighing up the costs of coping with an ageing population with the needs of workers who have already planned for later life.
Campaigners warned raising the retirement age in 12 years would plunge tens of thousands of older people into poverty every year.
The Centre for Ageing Better said an increase to the state pension age would “plunge tens of thousands of older people into poverty every year”.
The organisation said the planned changes “should not be rushed”, with its own analysis showing the number of 65-year-olds living in absolute poverty more than doubled in the two years after the process to increase the state pension age to 66 began.
Dennis Reed, director of campaign group Silver Voices, said there is “no justification” for any rises in the state pension “at the current time or indeed in the next decade”.
He said life expectancy is no longer rising so the previous defence for increasing the pension age “no longer holds”.
Sir Steve Webb, former pensions minister and a partner at LCP pension consultants, also pointed out that life expectancy has “barely changed” in recent years.
Sir Steve said that pushing the retirement age forward would make a “huge difference to tomorrow’s pensioners”.
He also said that the economically inactive would be negatively affected by the changes, explaining that those people would be forced to live longer on Universal Credit, which he described as being a “very meagre income”.
Conservative MP Lee Anderson said the Government should focus on getting the “work-shy” back into the workplace.
“Getting these people back into work will save millions on our benefits bill and provide extra income to the Treasury to help pay our pensioners,” he said.
One MP told the Daily Express that such a move would be an act of “self-harm” by the Government, saying it would make little sense to announce the changes before the next election.
The state pension age is due to rise from 66 to 67 by 2028.
Senior Tory Sir John Hayes accepted that it is “likely” that the pension age will go up at some point, but he would want the evidence in favour of the policy to be “very compelling indeed”.
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