Brace for impact! The state pension age may rise again

The Centre for Social Justice (CSJ) has recently proposed a significant change to the UK’s pension landscape.  

They suggest that the state pension age should rise to 75 by 2035, up from the current age of 66.

This proposal comes amid concerns about the UK’s ageing population and the increasing Old Age Dependency Ratio (OADR), which are putting a strain on public finances. 

Implications for near-retirees and investment strategies 

Should the Government follow the recommendations of this influential think tank, this could mean a need to reassess financial plans.

The prospect of working additional years before being eligible for the state pension could necessitate adjustments in investment strategies and savings plans.

This is particularly important for those who had planned to retire at a younger age and may now need to consider alternative income streams. 

Opposition and ethical concerns 

The proposal has not been without its critics. Baroness Ros Altmann, a Conservative peer, and former pensions minister, has described the idea as “chilling and immoral.”  

She argues that it would force people to work into old age, increase the number of people claiming benefits, and could even shorten life expectancies. 

The complexity of life expectancy 

While the CSJ cites the increase in life expectancy as a justification for its proposal, this argument may not be as straightforward as it seems.

Recent research indicates that the UK has the slowest-growing life expectancy among G7 nations, which could potentially undermine the CSJ’s argument and suggest that the situation is more complex than initially presented. 

The need for proactive financial planning 

Whether these proposals are implemented or not, now is a suitable time to conduct a comprehensive review of your financial plans.  

The trend has, in recent years, been for the Government to accelerate the extension of the retirement age for the state pension. So those further away from retirement should not rely on it to provide them with an income in the early stages of old age.

It’s essential to proactively engage in financial planning to explore alternative strategies and ensure preparedness for any changes that may come into effect so that you can continue to retire at the right time for you.

Part of this financial planning is an honest and open discussion with your financial adviser about your goals and future.

An experienced financial adviser can help to ensure you stay ahead of pension changes. Speak to one of our experts today to learn more.