Government plans to raise the state pension age for men to 66 by 2016 are too hasty and do not give people enough time to prepare, pensions experts warned today.
According to the NAPF, many people in their mid- to late-50s, who have already made retirement plans, may be unable to change their savings and private pensions to cover the loss of a year’s state pension. People in that age group who have already fully or partly retired could be particularly hit.
Instead, the pensionable age should increase to 66 by 2020 for both men and women, giving more leeway for those approaching retirement to boost their savings, the NAPF said in its response to Government consultation on the state pension age.
It said that having a unified start date for both sexes would also combat fears about gender inequality as, under the current plans, men would start retiring at 66 – some four years earlier than women. A number of employers have expressed concern to the NAPF about the workplace equality implications of such a move.
The NAPF agrees the state pension age needs to rise, but it says the Government must do more to help older people stay in work. And it says that the ‘trade-off’ for working longer should be a better state pension. Its proposals for a Foundation Pension would see the state pension increase to £8,000 per annum.
Joanne Segars, NAPF chief executive (pictured), said: "Retirement ages do need to go up, but the Government is being too hasty. Lifting the state pension age for men to 66 by 2016, or even earlier, is simply asking too much.
"Many people now in their mid- to late-50s have made quite detailed retirement plans, and they may be unable to recalibrate their savings to cover the state pension they will lose. Six years is not enough.
"And those in their 50s who have already retired or who have switched to working part-time will also have a shortfall in income for that lost year.
"The Government’s proposals mean that men will face the higher retirement age of 66 some four years earlier than women.
"Gender discrimination is a big issue in the workplace and many employers feel very uncomfortable about the unequal nature of the current plans. The pensionable age should be raised to 66 in 2020 for both men and women. That will give people at least 10 years to plan, and will protect people in their mid- and late-50s.
"The trade-off for working longer should be a better state pension – the UK has one of the worst in Europe, and we think it can rise to £8,000 a year. More also needs to do be done to help older people stay in work for longer."