Better get a move on if you’re personally underfunded..
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The Conservative Party has outlined plans to raise the state pension age for men to 66 from 2016 – eight years earlier than planned. The pension age for women will also rise to 66 by 2020 under Tory proposals – something the party says is needed to help reduce the UK’s national debt. The Labour government has already committed to raising the pension age for men gradually from 65 to 68 between 2024 to 2046. For women it will rise from 60 to 65 over ten years from 2010.
So why do the two parties want the pension age to go up? Currently, there are more than 12m pensioners in the UK – with many more women than men in retirement. The move by politicians to raise the state pension age comes not only amid difficult financial conditions, but also as the UK population ages, putting increased pressure on government resources.
However, the UK is not alone. The world’s population is also growing older and many other countries are facing similar problems. The ageing UK population means there will be many more pensioners to support. In 2001, the government’s Actuary Department calculated there were 3.32 people of working age to support every state pensioner. By 2060, it says the ratio will have fallen to 2.44 people of working age for every one state pensioner. In other words, there will be fewer working people contributing towards the system that finances the state pension.
Both the Conservatives and Labour have proposed raising the state pension age, taking into account people’s longer lives. This means the amount of time spent in retirement, as well as government expenditure, will be reduced. Meanwhile, the value of state pensions has declined since the link with average earnings was cut by Margaret Thatcher’s Conservative government in 1980. Although a top-up benefit or pension credit has been introduced to ensure no pensioner has to live on less than £130 a week, Labour has legislated to bring back the link with average earnings by 2015 at the latest – a plan supported by the Tories.
