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The Actuary The magazine of the Institute & Faculty of Actuaries

New wave of young workers set to retire in their 70s

The consultant analysed proposals made by pensions minister Steve Webb earlier this week to increase the state pension age to 67 by 2026 and found this could leave a generation of young workers still in their jobs well into their 70s, unless they use private savings or employer pension schemes.

Mr Webb indicated the government could increase the state pension age to 67 by 2026 - 10 years sooner than the previous Labour government's proposals.

He said the current timetable was too slow with the gains in life expectancy over the past century.

The government is considering the implementation of an auto-mechanism that would tie increases in the state pension age to gains in longevity.

PwC pensions practice director Ed Wilson said employers needed to prepare for the changing age demographics of their workforce.

He said: "With the good news that we're living longer, companies will find that there is a significant change in both their consumers and the demographic make-up of their workforce.

"Employers will need to be smart to the opportunities this presents, and also be aware of the risks of increases in employment costs, for example the provision of benefits, healthcare, insurance, and wages.

"For individuals these announcements can erode their confidence in saving for their retirement, when the reality is that now is the very time that people should take responsibility for their retirement savings so they have solid options aside from the state pension."