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    From Ros Altmann:economist and pensions,
    investment and retirement policy expert

  • pensionsandsavings.com

    State Pension age rising to 70 even though UK State Pension is lowest in the world

    State Pension age rising to 70 even though UK State Pension is lowest in the world

    • UK State Pension officially the worst in the world – but still needs to be cut further.
    • Middle income groups receive worse pensions than any other country in the OECD.
    • Government actuaries say under-30s won’t get state pension till their 70s as new State Pension system is unaffordable.

    The Government Actuary says the UK State Pension is not sustainable, even though it is the lowest in the developed world, according to latest OECD figures.

    UK bottom of the global pensions league table: No other country has a less generous State Pension than ours for average earners. Even Chile, Poland and Mexico pay better State Pensions than the UK for middle income groups. With our aging population, and a decline in traditional final salary-type pension schemes, the UK faces rising risks of old-age poverty.

    Net pension replacement rates for average earners (state pension as a % of earnings):

    Country                                                % of average earnings

    Netherlands                                                   100.6
    Portugal                                                               94.9
    Italy                                                                       93.2
    Austria                                                                  91.8
    Spain                                                                     81.8
    Denmark                                                             80.2
    France                                                                  74.5
    Belgium                                                                66.1
    Finland                                                                 65.0
    Czech Republic                                                  60.0
    Sweden                                                               54.9
    Canada                                                                53.4
    Germany                                                             50.5
    USA                                                                       49.1
    Norway                                                                48.8
    Switzerland                                                        44.9
    New Zealand                                                     43.2
    Australia                                                              42.6
    Ireland                                                                  42.3
    Chile                                                                      40.1
    Japan                                                                    40.0
    Poland                                                                  38.6
    Mexico                                                                   29.6
    UK                                                                          29.0

    OECD average                                              62.9

    Source: OECD ‘Pensions at a Glance’ Table 4.8 December 2017

    State Pension has already been reduced, but will have to be cut further:  In April 2016, major reforms to the UK State Pension were supposed to have made the system affordable for the future, reducing its generosity. Beyond the 2030s, the new State Pension will be lower than the old system for most people and the lowest paid, predominantly women, will generally lose significantly from the new system. Despite this, the Government has been advised, by its own actuaries, that the costs of paying State Pensions will soar so much over the next 20 years and beyond, that further cuts could be required.

    Even though UK State Pension is lowest in the world, it needs to be cut to avoid massive tax rises – perhaps dropping triple lock: The Government Actuary believes that just funding the UK’s exceptionally low State Pension will require reducing payments in future or dramatic tax rises. The options would include dropping the triple lock (which increases the new State Pension in line with the highest of earnings inflation, price inflation or 2.5%) and increasing State Pensions in line with average earnings instead, or possibly doubling National Insurance rates for average workers. Policymakers face difficult decisions and are also likely to need to increase State Pension age further.

    Everyone aged 30 or below will get no State Pension till their 70s: State Pension age has been rising since 2010 and will reach 66 by 2020, increasing further to 67 and then to 68 under existing legislation. However, the Government Actuary assumes state pension age will be 70 in the 2050s and 71 in the 2060s. This means anyone aged 30 or below, will not get their state pension until they are age 70. And those aged 20 or younger will have to wait until they are 71.

    More to do to address UK pensions crisis – including making private pensions more attractive: We are one of the world’s leading economies, but our support for the oldest in society is not fit for purpose. Even though most people will receive the lowest State Pension in the developed world, the costs of providing for our aging population have not yet been brought under control. To avoid burdening younger generations with significant tax rises, it is vital that more is done to boost private pension saving. Auto-enrolment is a good start but the pensions industry needs to attract more customers to pay more into their pensions.

    Here is a link to the Government Actuary report https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/653374/QR_2017_report_Oct_2017.pdf


    35 thoughts on “State Pension age rising to 70 even though UK State Pension is lowest in the world

    1. Yes, we 50s born women know all about waiting for our state pension. Two hikes, one in 1995 which we weren’t Informed of, then 2011, which added another 18 months on.I’ll receive my sp on my 66th birthday, Dec 2020. I’m almost halfway through serving my redundancy notice and at 63 wonder who will employ me and how many hoops I’ll have to jump through, to claim any benefits, after paying NI contributions for 46 years. It is so unjust we are being treated in this way. Company pensions weren’t available to us when we were younger . Most women stayed at home to raise children, then when we worked, usually in low paid employment. We now are caring for our grandchildren, enabling our children to work and also caring for sick/elderly parents/relatives, saving the government £millions. This is a shameful way to treat the elderly in a civilised, wealthy country.

      1. Well said. I am in the same position, made redundant at 59 and now unemployed. I am 62 in October so over 4 years for me to wait! I hope you get someone better than I did at the Job Centre. It was awful. She told me I could do “any” job ( I was a Cluster Manager for Thomas Cook) and asked me if I had suitable clothes for an interview. I was better dressed than she was!! I was then told that I had to spend 35 hours a week looking for a job even when my doctor said I was to ill to work. I gave up and told them to keep their money, I was not prepared to suffer the humiliation. I now care for my elderly mother, disabled daughter and unwell husband saving the government a fortune in care costs.

      2. Lin, you and the other ladies and all UK ladies of a certain age group have been terribly hard done by. The male s of that generation have not been so harshly treated. The Treasury are rotters to say the least, they always seek out the most vulnerable in society to tamper with their finances. My wife had three different pension dates and even then the small print affected the actual payment date. Pensions can be affordable and it is a shocking indictment of all UK govts since the 80’s when I seem to remember a 10% hike at some stage. Just 4 billion from the over-bloated and indefensible foreign aid budget were diverted to a proper budget line then our pensions would improve by up to 100 pounds per month, not much but a start. And each year a generous rise would be forthcoming. I have no idea whatsoever why successive govt’s have not protected OAP and their pensions. I speak as a disabled ex military, whose pension levels are frankly a disgrace and again at the bottom of the list compiled by the OCDE. The silver voter must do something to force a change. Govts’ should be taking care of their own and not some rich country’s space programme and ethnic pop groups. I truly hope you find good employment soon. Good luck.

    2. The UK was a bit nearer the average, until Thatcher.
      Regrettably, nu- labor did very little to raise it.
      As Thatcher said at the time ” There is always Housing Benefit”.*
      But now the Bedroom Tax and Universal Credit are taking that away, in order to reduce the tax on shareholder profits.

      * It was part of her ” There is no such thing as ‘ society’ interview.

    3. Women have always been paid less than men now they are again hitting women financially saying there needs to be equality. Where is the equality for women who all their working life have not had equality. Pay them their pension at 60 yrs

    4. England is a rich country ros …..why don’t you share the wealth around a bit……tax all those company’s that avoid taxes….hidden offshore wealth too by fat cats…..instead of going on about aging population. I am 64 my pension was hiked from 60 to 65 plus 6 months……no notice either……disgraceful shameless MPs on their big fat paychecks and golden pensions

      1. Well said Lynn I am in the same position as you. I am 64. I should have had my pension four years ago but I have to wait for another year and six months the same as you. Westminster screwed all us 1950’s women badly. They did not care about us they chose just to simply hang all of us out to dry. It is high time that we just refused to accept this crap and started fighting back.

    5. I am disgusted I have worked all my working life i’m a cleaner I do three jobs a day it’s a very demanding jobs I so I have to wait until i’m 66 to claim my pension i’m 62 at the moment i’m Riddled with arthritis throughout my whole body but mainly in my hands which as you can imagine is quite dibilitating not every person is fit and healthy enough to work I take a cocktail of medication just to be ale to do my jobs each day

    6. Fifty percent of woman are single by 60, most are not the ‘incidental recipients of their ex- husbands pension’, most reply exclusively on their broken work record to see themselves through retirement.Many are unable to work in their 50’s and 60’s due to chronic health conditions often made worse by the menopause with osteoarthritus and the like setting in well before 66. Others are unpaid carers for their families. Others like me still have children at university to support and even though we try to continue working we are put on short, fixed term contracts at 60 or made redundant.

    7. It is an absolute disgrace to just put up the pension age with no discussion with the people affected you are paying young people to stay on the dole and make older people work longer because they cannot get their pension, you will end up with a lazy young society who think they should be paid to stay at home and live off mum and dad who have worked all their life and have to carry on it’ll d 60s are you all thick can’t you see the bigger picture?

      1. If the stringent conditions that are placed on those claiming benefits as discussed by Lynn Zalenka, I find it hard to believe that their is a ‘lazy young generation’. Perhaps you’re basing that opinion on your family or neighbours? I can share with you that there is no housing benefit, no unemployment benefit, nothing else as a hand out. I’m sorry that you view the younger generation with such distain.

    8. I am 64.It is conceivable that my 20 year old daughter will receive no pension but will be expected to pay for my age group.This is potentially extremely divisive.

      1. Why is your daughter paying for your age group. Your age group has paid for their pension over their working lifetime, through taxes and National Insurance

    9. Just short of my 64th birthday and about to be kicked out of my job no redundancy. Where I get a new job? Anybody offering me one? Thought not! I have worked hard all my life since I was 15 when I left home, I worked and my wages were sent home, I never even saw my payslips they were given to my mother. Now I find out that I will be on a reduced pension when I retire I have no back up funds.
      Oh to be old, cold and probably homeless in the U.K. such a great nation to be proud of? I don’t think so!!!

    10. Struggle to reply without expletives. I’m a Waspi and as far as I’m concerned, they’ve breached the contract I entered into with them at age 15 and they’ve stolen my money

    11. Kids are finding it hard to get jobs . Set the pension to an acceptable retirement age , and make way for younger generations to learn the jobs that become available to them through that process . We won’t see a pension ,we won’t live long enough to enjoy what we’ve worked so dam hard for. Quality of life means nothing ,nor does the value . The more that dies ,the less to pay out when increasing the age .

    12. Can we please all wake up. Yes I know all politicians are by nature self centred, ogotistical people. However we have sat back long enough, this Brexit carry on, could be very hurtful to the poor middle classes, and it is self made by this Conservative Party. We have the power to stop al this “making the rich richer, and the poor poorer” Speak up and be accountable for our once great country, or pay the price.

    13. If the stringent conditions that are placed on those claiming benefits as discussed by Lynn Zalenka, I find it hard to believe that their is a ‘lazy young generation’. Perhaps you’re basing that opinion on your family or neighbours? I can share with you that there is no housing benefit, no unemployment benefit, nothing else as a hand out. I’m sorry that you view the younger generation with such distain.

    14. How do other countries manage to pay state pensions higher than the UK? We are meant to be the 5th wealthiest country in the world, there is something very fishy going on. Does the govt realise that some women have absolutely no money to live on, have to sell their homes, why can’t we receive pension credit until we receive our SP at 66+, and think it’s disgusting that women over 60, have to go through the humiliating farce at the job centre

    15. YES the UK has the lowest state pension in the world.However, the Conservative, Labour and Lib Dem parties all wanted the UK to stay in the EU. However, they NEVER told us that the EU has a big pensions hole looming. It is going to cost well over 30 Trillion euros for EU pensions over the next generation of workers. So there is absolutely NO DOUBT that UK taxpayers would have been expected to subsidise these pensions all their working lives while UK pensioners were having to wait until 70 or 70+ to get their pittance from the UK government.

    16. First question, how much of the disparity due to the “average income” in this country? The State Figures never seem to really show the proportion of grossly overpaid which pushes the mean level up. The statistic may be, probably is, distorted by those living inside the M25 (watch “Homes Under the Hammer” for a good social picture of house prices).
      Second question, why is there no control over the way in which the private pension industry mistreats its annuity holders, doling out the pensioner’s money at such a low level to ensure the company almost always wins by using an unfairly high self-set “life expectancy” – well above the government statistician’s level?

    17. Other countries are able to pay higher pensions because the workers pay higher contributions than we do. I can only speak for Spain, where I lived for 20 years. As a self employed person I had to pay €275 per month as a flat rate whatever my earnings. I believe higher paid workers have to pay more. Apart from that the basic rate of tax is payable on all earnings over €5,100. This is being raised to €7,000. I can’t speak for the higher tax rates as I didn’t earn enough.
      Compare that to the UK system where the tax free allowance is over 11,000 pounds (being raised to 12,000) and NI for the self employed is less than a third. If we want better pensions they have to be paid for. I for one would be happy to pay an extra few pennies on my tax if it meant a better pension.
      BTW I am a fifties woman who has to wait until 66 for my pension.

      1. I’m a Waspi too. I gave up teaching when my identical twin died of cancer ten years ago today in 2008. I was under the impression I would still get my pension at 60 and was with a partner. I got cancer two years later. My partner didn’t want to support me. I’m now on my own and had to obtain my teaching pension early to survive on my own. My pension got moved from 60 to 66. I’ve spent most of the last ten years looking after my daughter’s child and my mum who developed dementia and died last summer. Pensions are NOT fair. Men are not relied on to stop working for the sake of caring for the children or grandchildren or elderly relatives. I struggle and will struggle more now as I suffer from arthritis and lymphodema and mental health issues as a result of my cancer surgery. God help our younger people because our government won’t. Fairness does not exist in the UK .

    18. There is a massive pension crisis brewing in the UK as our state pension is awful and as the DB (final salary schemes fade) people have not been saving enough for their retirement. Just as in the US where their 401k Schemes are not delivering our DC will see people having to work well into their 70’s. A prosperous retirement with DC needs a pension pot that amounts to them saving c12 to 15% of their career earnings…

    19. Am 66. I got my pension when I was 61 as I just missed the 60 threshold by 9 months. Am still working part time as I don’t have a works pension and my husband is unable to work. I get just under £600 every 4 weeks SP. Not enough to live on so I have to work. My 50th anniversary of working is next month. I don’t know when I will be able to stop working. Not in the very near future unfortunately.

    20. My mum is 61 in may born on 57 has astma she lost my dad and she is barely getting by with mortgage and house bills etc shes not entitled to any help and with the pension going up its stressing her out

    21. The idea that people will be able to work longer and longer is ridiculous. In the next 20 years, millions of jobs are going to disappear because of robots and artificial intelligence. This revolution is going to replace many middle-class, white collar jobs, not just low skilled jobs like warehousing, factoryvwork etc. Governments in the future will have to pay citizens a basic salary regardless of whether they’re employed or face permanent deflation and the breakdown off the capitalist system as people won’t be able to afford to purchase goods and services.

    22. Dear oh dear, Ros. What an argument! I summarise:

      With our aging population, and a decline in traditional final salary-type pension schemes, the UK faces rising risks of old-age poverty. The State Pension, the lowest in the world for average earners, has already been reduced, but will have to be cut further to avoid massive tax rises.

      Ah, so it’s all about avoiding paying more tax so that pensioners can be old, cold and poor.

      If all those other countries can fund state pensions more generously, than the UK (5th richest country in the world) should be able to do so. If it requires tax rises to provide dignity for people in their old age, then I for one would be happy to pay more. It would help, too, if the government closed down tax havens and tax loopholes.

    23. It’s not women of the 50s. Mine has gone up twice. I also have so far worked 40 yrs but unlike my brother my employment didn’t benefit from a final salary Pension. I also had 4 children whilst working. A high percentage of woman would have followed similar path. Are salaries were to top up the family not to put in a pension. single mums concentrated on the children’s needs not there future retirement. This is an in fair situation we have been placed in.

    24. We in Scotland have to think very hard about leaving or remaining part of the UK.

      Once independent the Scottish Government will be able to look after pensioners, those on low income and families requiring support much more fairly than Westminster who are systematically widening the gap between rich and poor.

      Please visit our website for more information. pensionersforindependence.scot

    25. As a father of three kids if I was to work just 16 hours a week on minimum wage without my wife working at all I would clear £2,000 a month in total. Anyone arriving from the EU today could claim this whilst all of those who have worked and contributed for decades get left out. It doesn’t seem fair to me.

    26. Well Ladies we need to blame a Female for the changes
      around 1989 a women who worked in London Took The Govt to court because she thought it was unfair for her to be made to retire at 60 ?
      She won the case and then the Govt equalised all pensions for men and women
      so we have our own gender to blame on this issue
      We have fought for equality rights and now we have to take the rough with the smooth we cant have it both ways

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