The Government may have delayed the state pension age increase to 68 but with an ageing population and a growing number of people collecting their pension, reform “cannot be ignored indefinitely”, warns Quilter.
Its prediction follows the latest Census data from the Office for National Statistics which showed that the number of people aged 65 years and over increased from 9.2 million in 2011 to over 11 million in 2021 and the proportion of people aged 65 years and over rose from 16.4% to 18.6%.
The data also highlights how men and women across all older age groups are feeling healthier compared to the 2011 Census, with most age groups reporting less “bad” or “very bad” health.
Jon Greer, head of retirement policy at Quilter, said: “The data points to a pension age cohort who are feeling healthier, but with potentially more complex planning needs with increasing life expectancy and changes in care needs and relationship status. Ultimately, this shines a spotlight back onto the sustainability of the state pension and at what age people can expect to receive it.
“While life expectancy growth is slowing, the fact of the matter is that the UK has an ageing population, and this has become somewhat of a demographic ticking timebomb. As we have seen in the recent debates around the state pension, having an ageing population is going to put huge pressure on the public finances as fewer tax revenues are received at a time when more welfare payments are required.
“The state pension age question may have been kicked into the long grass for now, but with more and more people collecting their pension and living longer, reform cannot be ignored indefinitely.”
Greer says that while the state pension triple lock will likely come into the firing line around the next election, it is inevitable that it will need to be replaced with a less generous uprating mechanism in the future.
Greer added: “The last thing retirees need is to have their pension pot run dry as they age, and especially if they are feeling in good health and able to continue doing the things they love.
“Assessing how long your pension pot could last over the course of a long retirement is crucial from the outset of giving up work, giving you time to adapt your retirement plans and ensure you manage your pot as efficiently as you can.”
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