The big losers in the current round of pension reforms are likely to be men and women in their 40s and early 50s.
Millions of retirement savers face an uncomfortable financial decision – either live now and pay later with a poorer retirement or cut living standards now in readiness for funding their later years.
Many will find the decision unpalatable, but if the government acts to change the state pension age to 67 by 2026, those who do not save now may face a financial struggle.
Putting back the pension age means anyone aged between 42 and 53 has to wait an extra year to draw their state pension.
“We’ve been clear that the current timetable for moving the state pension age to 67 is too slow, due to the staggering increases in life expectancy and we are committed to reviewing the date,” said a spokesperson for the Department of Work and Pensions.
Pension advisers reckon someone aged 47 now needs to put an extra £14 a week away to make up that lost year of state pension. The extra saving would give around £7,500 of annual income.
Delaying the decision means upping the ante. A 53-year-old needs to save an extra £50 a month to make up the same deficit as someone aged 47.
“People need enough time to plan appropriately, whether that means working longer, if they can, or saving extra,” said Tony Attubato, of the The Pensions Advisory Service, an independent advice group.
“People really need to think about what kind of income they want in retirement and whether it will be enough.”
The problem is even worse for around 300,000 women who were due to collect their state pension at age 60 but now have to wait until 65 or possibly longer if the dates are put back.
Meanwhile, The Prudential reports millions of workers would rather spend than save and either have no pension or fail to put enough cash away every month to fund their retirement.
Not only will they have a frugal lifestyle in retirement, says the pension provider, but they are missing out on £15,000 tax relief provided by the government to boost their funds.
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