Pinching Pennies: Brits to Link Retirement with Longevity

In a move intended to halt the trend for workers to spend a growing proportion of their lives in retirement, the Chancellor announced a mechanism to raise the state retirement age automatically in line with life expectancy. The pension age is already due to increase to 66 by 2020.

But with one in five people alive today expected to celebrate their 100th birthday, ministers have concluded that more radical steps are necessary.

Mr Osborne said it would no longer be “affordable” to provide an adequate state pension when most people could retire at the relatively young age of 65 or earlier.

In future, he said, regular, independent reviews should establish longevity rates, which would then be used to decide the state pension age.

Retirement for millions of public sector employees is due to be linked to the state pension age by the end of the current parliament, so the move will affect a significant proportion of the workforce. Longevity is rising at a rate of seven months every year, meaning that, under the proposal, employees in their twenties, thirties and forties could find themselves working beyond their 75th or even 80th birthday.

A number of other European countries, including Sweden, Norway and Germany, have introduced some link between the state retirement age and life expectancy.

Read the rest Via:Telegraph