Millions forced to work longer as state pension age to rise SEVEN years earlier

Around five million people aged between 49 and 55 could lose approximately £12,500 each if the Government brings forward the increase in the State Pension age to 68.

The higher age is currently due to be phased in between April 2044 and April 2046, affecting people born between April 1977 and April 1978.

However, Treasury officials have told the Office for Budget Responsibility that “current policy” is to introduce the change at least seven years earlier, from 2037.

The OBR said: “The Treasury has confirmed to us that this is the Government’s current policy position, rather than the legislated increase set in the Pensions Act 2007.”

A review led by the Government Actuary’s Department and Suzy Morrissey, deputy director of the Pensions Policy Institute, will recommend when the increase should happen.

The Government will consider the review before deciding whether to alter the existing timetable.

Bringing the change forward could save the Treasury an estimated £6billion a year from 2037 compared with the current schedule.

Research from the Standard Life Centre for the Future of Retirement shows how heavily many older people already rely on continuing to work.

More than a third of non-retired people in their 60s expect the rising State Pension age to extend their working lives. Some 36 per cent said they would have to remain in employment for longer as a result.

Everyday expenses are also delaying retirement. Among people aged between 60 and 65, 38 per cent said they continued working because they needed the income to cover their living costs.

Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said remaining in work could benefit people who made the decision freely. However, she warned that many older workers had little financial choice.

She said: “Working later in life can offer real financial and social benefits, particularly when it reflects personal choice.

“Yet for many people, this isn’t a lifestyle decision but a financial necessity. Millions across the UK are unable to retire when they want, underlining the challenge of retirement adequacy and the need for longer working lives just to bridge the gap.”

Eligibility for the State Pension plays a significant role in determining when people can afford to leave employment.

Since the gradual increase in the State Pension age to 67 began in April, 37 per cent of employed people aged between 60 and 65 said they planned to continue working until they qualified for the payment.

The State Pension provides a large proportion of the income received by most people after they retire.

Separate findings show that one in six retirees has either returned to work or is considering doing so after discovering a shortfall in their retirement finances.

The situation comes as more than 15 million people across the UK are not saving enough to support themselves adequately in later life.

Ms Foot called for careers services designed for older workers, greater access to flexible employment and better health support in the workplace.

She said: “To make working in later life as accessible as possible, we need expanded, age-tailored careers support, alongside better flexible work arrangements and improved access to in-work health support.”

However, working for longer may not be possible for everyone. People with long-term health conditions and those providing unpaid care could face particular financial difficulties if they must wait longer for the State Pension.

Ms Foot said: “The Government must set out a clear plan to ensure the most vulnerable are supported before and during retirement, mitigating the negative impact of further changes to the State Pension age on their financial security.”

The Pensions Commission’s interim report has also called for the system to respond to more flexible working patterns if longer careers are to be fair and achievable.