The impact of upping the retirement age

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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The A4e Blog: Addressing the wider impact of debt

Wednesday 25th May 2011

In the second installment of his two part blog, A4e Executive Chairman Mark Lovell takes a look at what needs to be done to address the wider impact of debt:

In my last blog I looked at what needs to be done to tackle the root causes of debt. As I mentioned, the issue is twofold and as well as combating the root causes of debt, we need to address the wider implications of it. Debt advice needs seamless links into clearly associated services of support that will prevent debt arising. We need to move to more effective prevention services, as often issues manifest are unrelated to debt problems - if these were tackled earlier, a descent into crisis could be prevented.A core part of addressing these wider consequences through more joined up services relates to the impact on wellbeing. Studies have long linked poor health and poverty. We know debt is a big factor in depression and other health related problems. In 2008, I commissioned an independent evaluation into one of our debt advice services - the findings are sobering:• 83 per cent of our customers described themselves as being extremely stressed because of their debt problems• 53 per cent were suffering from clinical depression with strong links made to their financial situation• 48 per cent said their relationships were strained because of debt• 33 per cent had said they had even contemplated suicide with a number referencing actual suicide attempts• Over 90 per cent of the working age population in these households was unemployed and generational poverty & worklessness rife.Such stark evidence requires a rethink of how we link broader support services together. My concern is for those people who deskilled in the recession, stayed in work but have mortgages and other debt obligations. As interest rates rise, these are the most at risk group of becoming long term unemployed and manifesting a range of other problems, the biggest of which will be indebtedness. In one of our services over 60 per cent of debt advice consumers were 'lower middle income' earners, a 'squeezed middle', with unmanageable debts averaging at over £12,000 per customer.The debt advice and financial services sector must become better integrated - together with accessible health related services, housing support, family support, social services and welfare to work programmes. Access to these ‘holistic’ services should be through a unified, personalised view of the customer, not just simply passed from pillar to post in a complex referral and sign-posting network.A clearer focus on joined up services and prevention is needed in this industry and from governments. Society will continue to bear the cost in so many ways if we cannot step up and address this challenge. If we can do this and address the root causes of debt then I am confident we can start to move forwards.
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Posted in: Addressing,impact,wider