Pension warning sparks savings concern
A new report released this week by the Commons Work and Pensions Select Committee warns that any further increase in the state pension age could mean many workers die before receiving any payouts. In a climate where debt is rising and impacting more and more older workers, the news is another reminder of the importance of taking control of your finances sooner rather than later.
Questioning the ‘triple lock’ guarantee
The report, carried out by the Institute for Fiscal Studies on behalf of the select committee, found that the state pension age would need to rise to 70.5 years old by 2060 to maintain current levels of government spending. That’s higher than the average male life expectancy in 26 areas of England and 162 areas of Scotland.
With pensioners now an average of £20 per week better off than working households, the committee is arguing for an end to the ‘triple lock’ guarantee, which ensures pensions rise at 2.5% or average earnings (whichever is highest) every year.
Rising debt among older age groups
Although retirement can seem a distant prospect, workers would be wise to look at their monetary situation early. Recent stats from insolvency service Creditfix suggest that the average age of people seeking help for problem debt is rising. And with personal debt levels growing at 10.6% per year, there’s a risk that more people will face difficulties as they approach retirement.
The trend is particularly pronounced in certain areas – while 35% fewer people in Edinburgh sought help with debt repayments last quarter, it was the opposite in Bristol, with 27% more people needing support.
Taking control in an uncertain climate
The government has committed to its triple lock pensions guarantee until at least 2020, so the prospect of a rising state pension age remains very real. And in an uncertain economic climate, consumers would be wise to ensure that they are not overburdened with debt.
With interest rates at historic lows, now may be the time to consider spending your savings on reducing your debt, and cutting charges and risk. In the long run, this may help with ensuring financial stability.
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