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State pension: Retirement age should increase to help UK recovery, official states

Samir SharmaJul 28, 2021Business
State pension: Retirement age should increase to help UK recovery, official states

The State Pension age currently stands at 66 for most people, after changes recently. Historically, the state pension age stood at 60 for women and 65 for men, but changed by late 2018 in a process of equalisation. It is set to rise to 67 between 2026 and 2028, and once again to 68 from 2037 onwards.

But one policymaker has floated the idea of Britons working for longer to help the economy recover from the hit it took due to COVID-19.

Gertjan Vlieghe, a member of the Monetary Policy Committee (MPC) of the Bank of England, has analysed ways the country can recover and fight any subsequent recessions.

An increase to retirement ages, he suggested, could be a potential solution, but a last-ditch measure as funding options run out. 

In a speech which marks the end of his time as a member of the MPC, Mr Vlieghe outlined the impact of such a measure.

READ MORE: Council Tax Reduction warning as Britons could get up to 100% off bill

Mr Vlieghe went on to acknowledge there would have to be nuances when considering a retirement age increase.

He pointed out poorer workers are often recorded as having a lower life expectancy than their wealthier counterparts.

This has been an argument which has surfaced in the past when it comes to increasing retirement age.

Some have argued it would be unfair on those who are predicted to have a shorter life expectancy, as they would not be able to enjoy retirement in the same way.

Similarly, Mr Vlieghe also said not all roles can be performed by older workers – another strand of the argument. 

But he did go on to state that a shift towards older workers remaining in the workforce is already occurring.

More part-time work and the flexibility to work from home, he added, could help older people to stay in work for longer. 

State pension age is already increasing due to the average life expectancy across the country increasing.

Now, Britons are thought to spend more of their adult lives in retirement than ever before. 

But whether a rise to retirement age would be supported or not, is yet to be seen. 

The Bank of England outgoing official also stated there are other ways to boost the economy further.

He said the central bank could cut its base rate even further from 0.1 percent to below zero.

In March 2020, the Bank took a major decision to reduce its base rate to 0.1 percent – the lowest in its history.

Negative interest rates, which have never before been implemented in the UK, would have significant implications for savings and mortgage rates.

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