The “jinxed generation” will have another cross to bear. George Osborne’s Autumn Statement announcement on Thursday that the state pension age will rise faster than previously expected, means a cohort now in their 20s will have to work harder and longer than its parents or grandparents before reaping the rewards of retirement.
Philip Booth, programme director at the Institute of Economic Affairs, which first proposed that state pension age should be linked to life expectancy, argues that the new later retirement age will simply restore the balance between the time spent in work and the time in state-funded retirement that existed in the 1960s and 1970s.
“We are not talking about people working until they are 90 but just for as big a proportion of their life as they used to in the 60s and the 70s – it is not that dramatic,” he said.
Mr Booth argued that the change would “de-risk the system”, stimulating a market in “bridging annuities” to cover the period between a chosen retirement date and the age of eligibility for the state pension. Markets were particularly effective at dealing with savings products to provide an income over a short defined period which did not carry the unbounded risk of lifetime annuities, he argued.
Income protection products could also be taken out by those who could afford them, to guard against the prospect of people falling sick before they reached pension age, he suggested.
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