The impact of upping the retirement age ~ Debt Managements and Consolidation

The retirement age is set to increase to 67 as the government begins implementing its plans to extend the working life of those aged 50 and below.

Ministers are currently pushing through the Pensions Bill, which plans to raise the age at which men and women can claim a state pension to 66 by 2020, and the retirement age now looks as though it may rise to 67 by 2026.In an interview, Pensions minister Steve Webb saidthat the current timescales for increases to pension age are too slow. “If it is 67 in the mid-2030s we will be going backwards in terms of share of your life in retirement. I mean the problem would be worse than 20 years before.“If you think of male pension age, it hasn’t changed for a century. How much has life expectancy improved in a century? So, in a way, what is going on is a big dam that is finally breaking.’”

Over 8 million people in their 40s, who currently anticipate retiring at 66, will be affected if the age of retirement rises to 67.

So how does this look set to affect those already in debt?Michelle Mitchell, a director at Age UK, told the Telegraph: “Any increase to the state pension age needs to ensure that people have enough time to plan for the change – Age UK believes that people require at least 10 years’ notice. “We also believe that the process of deciding the state pension age should be informed by independent advisers considering a range of factors.”Furthermore, according to the Scottish Widows Workplace Pension report, more than half of those individuals without a pension have said that have no spare money to invest in one. The increase of an extra year before individuals are eligible for a state pension would therefore have serious consequences for those without a private pension with which they can support themselves during the interim. TUC general secretary Brendan Barber told the Mail Online: “Making people wait longer for a state pension has much less impact on the better off. “They lose a smaller proportion of their lifetime pension income, are more likely to have a decent pension of their own, and are more likely to have the kind of jobs that they will enjoy doing for longer.“But it has a major impact on the less well-off. “They are far less likely to be in work in their 60s, and even if they are may well have heavy physical jobs that they will not be able to extend.”
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