A baby born today will work until the age of 77, a report into the pensions crisis has claimed.
The study by PwC predicted that rising life expectancy rates would push up the retirement age for future generations.
Plans outlined by the UK Government in the Queen’s Speech will link the retirement age to longevity, meaning it will reach 67 by 2028. PwC expects a further increase to 68 by 2031.
Those currently in their 30s will not retire until they are 70 and children born today will be working until the age of 77. Their children, in turn, face a worklife that lasts into their mid-80s.
Alison Fleming, head of pensions at PwC in Scotland, said: “The era of retiring in your 60s is facing extinction with many people born today facing a future of work from 17 through to 77. People may want to stop working sooner but the challenge will be whether they can afford to bridge the gap until the start of their state pension.
“The rising state pension age is putting even more pressure on people to save and as a result, even those in their 40s and 50s may want to start revising their pension plans now – particularly if their state pension age might shift by a couple of years.
“This gradual rise is also raising big questions for employers. It is not just the impact an ageing workforce will have on opportunities for younger employees but how can they adapt their organisation models and working practices and what changes do they need to make now to the benefits they offer their employees?
“This isn’t something that can be pushed under the carpet to be dealt with at a future date – the state pension age is increasing steadily and firms need to start planning and adapting now.”
PwC based its findings on pension value acceleration and demographic trends. When the state pension was introduced in 1908, there were more than 10 people working for every one pensioner. The figure is now 3.2 and by 2050 it is predicted to fall even further to 2.9.
The Scottish Government insisted that the solution was independence, which would allow Scotland to ensure “a fair and decent pension” for older people.
A spokesperson said: “We need the UK Government to set out what its most recent proposals will mean for Scotland’s pensioners. What is increasingly clear is that an independent Scotland would be best placed to provide a fair and decent pension for all pensioners – spending on pensions in Scotland represents a smaller share of Scottish tax revenues, including a geographical share of North Sea revenues, compared to the position for the UK as a whole.”
The report did contain some good news. Upwards trends in longevity mean that as well as working longer Scots can expect to enjoy a longer retirement period of up to 20 years.
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