Calling the move a 'difficult decision', Osborne said:
"Young people will know our country can afford to give them a proper pension when they retire. That’s this generation fulfilling its obligations for fiscal responsibility to the next generation – not saddling them with the debts and the decisions we weren’t prepared to deal with ourselves. But we also have to guarantee that the basic state pension is affordable in the future, even as people live longer and our society grows older. The only way to do that is to ensure the pension age keeps track with life expectancy."
Ian Naismith, Pensions Expert at Scottish Widows, said:
“The changes to the state pension age to be announced in the Chancellor’s Autumn Statement today will have the nation’s workforce reconsidering what retirement could look like for them. Research from our annual Pensions Report has shown that the average British worker wants to retire at the age of 66. This means that for many workers, the prospect of having to work potentially for an extra four years longer than they would ideally like will be a daunting prospect.
“Furthermore, our research showed that the average British worker is looking for a retirement income of £25,000 a year, having saved from age 30. Achieving that level of income is likely to require contributions of around £1,000 per month, which is almost eight times the automatic enrolment minimum for someone earning £25,000 a year and likely to be beyond the reach of most.
“However, this needn’t be the case. Having a plan in place for your retirement, and not just relying on the state pension, can make a huge difference to making sure that reality matches up to expectations. It is clear that private pensions will need to play a bigger role in the nation’s saving habits – saving into a private pension from age 20 rather than 30 to 65 could add almost two-fifths to the final pension. On top of this, although the prospect of working to the age of 70 may seem bleak, our research found this can have a significant effect on retirement savings. A worker saving into a private pension who delays retirement from age 65 to 70 could see their income boosted by 43%. The cumulative effect of more than one of these options could make a big difference in matching retirement expectations.
“Today’s news must also be tempered with the fact that we will increasingly see a trend towards ‘phased retirement’, perhaps through working reduced hours, or shedding responsibilities and moving to a different job with less stress or less manual effort. This, combined with additional income sources such as ISAs or equity release from housing, could play an important role in plugging short-term or long-term income gaps.
“In light of today’s announcement, late career changes will inevitably become more common, and Government and employers should do all they can to facilitate them.”
TISA director general Tony Vine-Lott said:
“We broadly support the increases in the state pension age as a pragmatic step in response to increasing longevity. However, to give people certainty when planning plan how they will fund their retirement and to prevent those with modest earnings saving to no effect it is essential that the rise in pension age is accompanied by the planned introduction of a flat-rate basic state pension. The announcement that voluntary National Contributions will be introduced to allow pensioners to boost their income is welcome.”
Andrew Tully, Pensions Technical Director at MGM Advantage said:
"Given increases in longevity, and the financial savings generated, this change is inevitable. It means someone born today is unlikely to receive any state pension benefits until at least their 72nd birthday. While many see their SPA as a trigger for when to take their private pension benefits there doesn’t need to be a link so people can still plan to retire when they wish. But it does make personal savings ever more important in the retirement planning jigsaw, along with taking financial advice around how and when to take benefits."
Chris Masley, pension expert at Duncan Lawrie Private Bank, said:
“The Government wants to help ensure a fair deal for everyone, but a generation of young workers will no doubt be asking themselves how this is a fair deal for them. They will have to work longer and harder for a state pension that is still falling in real terms.
“Many will have already given up hope of not having enough money for retirement. Indeed, our research shows that while most people (67%) would ideally like to retire before they reach 60, over a quarter of people (27%) believe that realistically, they will not be able to retire until 70 or over.
“We should be encouraging young people to start thinking about their retirement plans early, but instead, as the age of state retirement drifts further away, people are increasingly choosing to not review their pension strategy until much later in life.
“If people do not expect to retire until their seventies, then it becomes all too easy to not make retirement planning a priority. In fact, the better mind set would be to start planning for retirement earlier, continue a strong commitment to it and maybe then people could aspire to finishing work at an appropriate age, or maybe even early."
