UK – January 11, 2010 – Officially, the Government is still collecting evidence for its review of default retirement ages but an interview with Harriet Harman, the Leader of the House of Commons, in today’s Daily Mail hints that they may soon be abolished.
Towers Watson says that population change would make it harder for the Government to resist reform, as the number of people in their late 60s is expected to rise by more than 600,000 in the space of five years.
John Ball, head of defined benefit consulting at Towers Watson, said: “People born in the post-war baby boom are just starting to turn 65, so pressure for change would only get stronger if the Government did nothing. The number of people in their late 60s is set to increase by more than a fifth between now and 2015. The state of the public finances limits what politicians can say to chase the grey vote, but this sort of gesture doesn’t cost taxpayers money.”
However, Towers Watson warns that, in future, problems for employers are more likely to come from people wanting to retire but being unable to afford to, rather than from people who are reluctant to leave jobs they enjoy.
John Ball said: “Younger generations who have not had access to final salary pension schemes will find that working for 40 years, not saving very much, and hoping to enjoy a good standard of living for 25 or 30 years in retirement doesn’t add up. And with the national debt having doubled since the Government last took a serious look at the State Pension system, there are no guarantees that today’s employees will get the benefits they are expecting.
“Improving life expectancy makes later retirement inevitable � if we’re living longer, we will need to work longer, too. When the Government permitted default retirement ages of 65 in 2004, men turning 65 were expected to live for 19 years on average. Now, it’s 21 years. However, it can take a long time for expectations to adjust and employers may find themselves with large numbers of disgruntled older workers on their hands.”
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