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State Pension Age – The Harsh Reality

Written By: Mark Cooper on January 14, 2016

Warnschild, Rot, Achtung, RentnerThe speed at which the UK State Pension age has increased and is still set to rise, in particular for females, has been dominating Parliament and the news in recent days with the UK Government under fire for such “injustice”.

Whilst not a popular view, I have been voicing my rarely held back opinion within the financial industry’s online forums and it is this: Collectively as a country we have to grow up and face some harsh realities on this and many other fiscal matters.

The seeds of this “crisis” were sown by not progressively increasing State Pension Age since the 1960s when longevity began increasing, when SPA should have been rising by more than a year every decade. We are now trying to catch up.

Looked at another way, the original “deal” based on longevity then was to receive on average a State Pension for the last 5-10 years of your life.

On that basis, if we say it is still for the last 10 years of an average adult lifespan, SPA should now be around 74 for men and 78 for women (who live on average 4 years longer than men).

If we were all squabbling over a huge pot of money marked “State Pensions” it would be more understandable but there is of course no such pot and a dwindling number of those who can be taxed sufficiently (NICs) to pay what has already been promised or even already in payment.

Harsh doses of reality are either swallowed with a sigh or imposed out of necessity. Either way the notion of females receiving a State Pension for the last 25-45 years of their lives or indeed males the last 15-35 is quite ridiculous given the state of this country’s finances.

Unless stamping our feet makes money come out of the ground it is going to be a fruitless exercise.

An essential part of Personal Financial Planning is deciding when you wish to retire, then building sufficient assets and future income streams to include bridging the gap between when the Government says you can retire and the almost certainly earlier date of your choosing. I am always here to help.