The average individual would be spending an extra nine years in work if the state pension age had risen in line with longevity since the end of World War II, research from Hymans Robertson has revealed.
If the government had continued to track longevity and kept pace with inflation that would mean that the state pension age would have already increased to 74, and the weekly state pension would be £320, double the current £160.
Conversely, the government would save £50bn a year in state pension costs.
According to the research, if people retired at 74, only seven years would be spent in retirement, since the average life expectancy in the UK is 81.
However, for those aged 65 healthy life expectancy is 76, so only a couple of years of retirement would be spent in good health.
In July, the government announced the state pension age increase should be brought forward to 68 between 2037 and 2039, due to increases in life expectancy.
Under the current law, the state pension age is due to increase to 68 between 2044 and 2046.
The change to the state pension age will leave 7.6 million people £10,000 worse off, according to analysis by the House of Commons Library.
Jon Hatchett, partner and head of corporate consulting at Hymans Robertson, warned that “averages mask huge disparities”.
He said: “At one end of the spectrum the number of telegrams sent by the Queen to those reaching 100 has risen from 24 in 1917 to nearly 7,000 today.
“At the other, life expectancy in the most deprived parts of the country is a couple of decades lower than more affluent areas.”
Mr Hatchett said that given these ranges, it is right that people are not all retiring at age 74 today.
“People should not be ‘dropping down dead’ in the workplace,” he added.
Hymans Robertson looked at these figures to demonstrate just how much the situation has changed.
Mr Hatchett said: “It underscores the need to commit to the changes suggested by [John] Cridland in his recent review of state pension age, and to bring forward the increase to 68 between 2037 and 2039.”
Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, said that changes in the state pension is something he makes his clients aware of.
He said: “Many of them are all too aware that the goal posts can move.
“This impacts the financial plan we build for our clients because potentially they may need to work a little longer than they planned or they might need to save even more.
“This places greater emphasis on their own private pensions and investments because you cannot really rely on the state pension.”
According to Mr Chan, savers need “more support from the government to set the right expectations”.
He said: “Many people have no idea how much they need to be saving for their retirement and underestimate this.
“Even at the full rate of 8 per cent contribution from auto-enrolment, it will be far from adequate for most people.”
maria.espadinha@ft.com
