UK workers face staggering retirement age rise

UK workers face staggering retirement age rise

Retirement age rises have been threatening the workforce, as the prospect of a work-free life edges further and further away.

The latest World Economic Forum (WEF) report does little to stave off those woes, confirming that Britain’s retirement age will, most likely, rise to 70-years-of-age.

Retirement age rises in England, and other developed nations, have been instigated to offset deficits in the world’s six largest pension systems.

WEF warned that pension deficits would more than quadruple to $224trillion (£174trillion) by 2050, unless people worked longer and saved more – The Guardian reports.

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WEF examined the worlds six biggest pension saving systems, in the US, UK, Japan, the Netherlands, Canada and Australia, finding that they were all under strain from an aging global population. Half of the children born in 2007 could expect to live until they are 103.

Britain’s retirement age is expected to rise to 67 between 2026 and 2028, but WEF warned that further increases would be necessary to offset the pension crisis.

Michael Drexler, Head of Financial and Infrastructure Systems at WEF comments: “The anticipated increase in longevity and resulting ageing populations is the financial equivalent of climate change. We must address it now or accept that its adverse consequences will haunt future generations, putting an impossible strain on our children and grandchildren.”

WEF’s report also calculates the pension savings gap, on the amount of money needed to provide every person with a retirement income, which is equal to 70% of their pre-retirement income.

The report welcomed the UK’s decision to ensure eight per cent of earnings will automatically be saved in a pension for each individual after 2019. This auto-enrolment boosted the savings of 22- to 29-year-olds and low income workers by $2.5billion (£1.94billion) a year.

With staff working longer now, than ever before, HR needs to be aware of the changes that an older workforce will have on the current status quo.

Recently, HR Grapevine conducted a poll into whether workplaces feel future-proofed for all generations – 70% said no.

A report titled ‘Age in the Workplace’, conducted by Business in the Community, found that between 2012 and 2022, an estimated 12.5 million jobs will be created from people leaving the workforce – meaning an additional 2 million jobs will be left open.

“The retirement savings challenge is at crisis point and the time to act is now,” said Jacques Goulet, President of health and wealth at Mercer.

“There is no one ‘silver bullet’ solution to solve the retirement gap. Individuals need to increase their personal savings and financial literacy, while the private sector and governments should provide programmes to support them.”

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Comments (2)

  • Frustrated
    Tue, 30 May 2017 12:25pm BST
    Why is there such age discrimination of the 50 plus when it comes to finding a new job. If you take a 55 year old they potentially have at least 12 years to state retirement and maybe even longer should they so chose. They have a wealth of experience and skills that will have been fully updated through continuous employment, so why oh why eliminate them because of age.
  • Brenda
    Sat, 27 May 2017 8:59pm BST
    To have paid in via NI Contributions for my Pension, plus the Work Place Pension is the replacement for NI contributions over next few years. Born in 1956b I have been forced to retire at 67 with no communication to this. But it seems all the monies I pay could end up I do not get if older retire age is actioned so why pay in for something I will be dead by that age due to pressure of working & trying to keep private rent roof over my head needing a level of salary to meet criteria required.

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