The government must take the financial needs of middle-aged carers and those who will struggle to keep working into old age fully into account when making any future changes to the state pension age, Age UK has warned.
The charity’s report Working Later, Waiting Longer, which is published today, has taken an in-depth look at eight people in their 50s and early 60s who are likely to lose out badly from any rise in the state pension age.
The people interviewed in the report are heavily reliant on their state pension for a variety of reasons, such as poor health or the fact they care for others, and are therefore likely to be particularly adversely affected by waiting longer to receive their state pension.
Increases in average life expectancy have meant the state pension age is now set to reach 67 by 2018 for both men and women. It is not slated to reach 68 until 2046 although this may be brought forward following a government review by former CBI director general John Cridland, who is due to report by May 2017.
Age UK has warned that while some people will be relatively unaffected by a longer wait for a state pension – and indeed increasing numbers of people are continuing to work after the state pension age – others could experience real hardship.
The charity said the people at greatest risk are adversely affected in a number of different ways – for example, they are more likely to be in worse health, to be in physically demanding jobs, or to have had less opportunity to build up a nest egg for their retirement after a lifetime of low pay.
As an illustration, the report said more than a third (37%) of 55 to 64-year-old women and around a fifth (19%) of 55 to 64-year-old men have no private pension savings at all and as many as 45% of pensioner couples and 71% of single pensioners currently receive at least half their income from state pensions and benefits.
Middle-aged carers also face hardship in later life because of having reduced their hours or given up work altogether to ‘do the right thing’ and look after a loved one. The report said benefits to help carers do not compensate for the money most forego in earned income so they are often left on a low income and with few savings when they themselves come to retire.
According to Age UK, the clear message from those interviewed for the report was that the government should take a more “flexible and individualised” approach to the state pension age, taking into account factors such as health and people’s ability to carry on working as well as caring responsibilities.
The charity also argued that, whatever happens to the state pension age, much more needed to be done to enable people with health problems to remain in employment, to help unemployed people in their 50s and 60s return to work and to support carers who want to combine work and care.
‘Sad truth’
Age UK charity director Caroline Abrahams said: “We should all be able to look forward to a decent retirement but the sad truth is that blanket rises in the state pension age, without any extra protection for disadvantaged groups, could take this out of some people’s reach.
“We are calling on the government to make sure they factor in the reality of life for middle-aged people like these before making any decisions about further raising their state pension age.”
She continued: “John Cridland’s report will be crucial in helping the government reach the right conclusions and we sincerely hope he will look closely at the position of those who simply cannot work for longer and take fully into account the growing expectations on people to help care for their parents as they age.”
Aegon UK pensions director Steven Cameron said: “The state pension is a financial lifeline for millions of people in the UK and there is a vital need to reform the way in which people access it.”
Pointing to last year’s pension freedom reforms, he continued: “We urge the government to extend this approach and offer every individual the option to take their state pension from an earlier age – for example age 60 – at a reduced level, something 42% of people have said they are in favour of.
“With every increase to the state pension age, more and more people will struggle to stay in work or get by financially until they can draw their state pension. The higher the state pension age becomes, the greater the need to offer more flexibility and this is something the Cridland review must seriously consider.”
Last month Cridland published an interim report on the state pension age, in which he said he would explore whether it was possible to “smooth the transition” between the working age and retirement.
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