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Pension age will 'undoubtedly' increase

10 August 2009 / by Rebecca Sargent

State pension age in the UK will undoubtedly increase, chair of the Pension Regulator, David Norgrove told the BBC over the weekend.

According to Mr Norgrove, life expectancy is increasing by six hours a day for a 45 year old man, meaning that the state pension age will have to exceed its current target for 2044 of 68.

At present, the pensionable age in the UK is 60 for women and 65 for men; however this will rise to 66 for both sexes in 2024, then to 67 in 2034, and 68 in 2044.

Speaking to the BBC, Mr Norgrove said: "People are going to have to work longer, partly because we're not going, as a nation, to save as much for retirement as we did in the past."

In fact, according to Mr Norgrove, evidence suggests that people are frightened of saving for pensions, as: "They think that pensions are very complicated. Actually, pensions in many ways are quite simple. Once you've made the initial decision you can let it run."

Since the economic downturn began, numerous final salary pension schemes have been closed as employers struggle to cope. However, Mr Norgrove believes this is inevitable:

"Inevitably, in a serious recession, we're going to see more companies going insolvent, but I don't think at the moment we see this as a crisis.

"The good thing about pension schemes is that, by and large, they're a very slow matter. This isn't like the banking system that can collapse overnight."

Meanwhile, Personal Accounts, a workplace pension scheme initiative aimed at lower earners is due to be launched in 2012, and address the need for employers to offer an accessible pension scheme.

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