Tories solution, another year at the grindstone
Tory call for later working an acknowledgement of the inevitable
Pension policy has not kept pace with life expectancy. Wider measures to mend
flaws in pension system needed Investors must confront the necessity to provide
for their old age.
The Shadow Chancellor George Osborne’s announcement today that a future
Tory government would raise the state retirement age to 66 as early as 2016
should be welcomed. The original plans to raise state pension age from 2024
through to 2046 are already widely seen as too little, too late.
Even
retirement at age 66 will still mean a long and hopefully comfortable
retirement for many. According to the Government Actuary’s Department, a man
reaching age 66 in 2016 can expect to live for a further 18.9 years, whilst a
woman could expect 20.9 years of life. Compared to previous generations, this
still represents a very long (and therefore very expensive) retirement.
Tom
McPhail, Head of Pensions Research ‘The decline in the paternalism of final
salary schemes and the state pension means that we have to tighten our belts. A
decent pension will not now happen unless we confront some tough choices such
as retiring later and spending less money now. We all need to save more.’
How
much will it cost to pre-fund the extra year’s pension through savings?
A
58 year old today would have to save around an additional £55 per month for the
next seven years if they wanted to bridge the gap of the lost year’s Basic State
Pension.
A
49 year old would have to save around an additional £23 per month for the next
16 years if they wanted to ensure that they could still retire at 65.
How
else can investors maximise their chances of a comfortable retirement?
Start
saving young. The difference between starting a pension at age 20 and at age 25
could mean an extra 28% income in retirement at age 68 (http://www.h-l.co.uk/calculator).
Human Resources news brought to you by theHRDIRECTOR – the only independent strategic HR publication.
6 October 2009
