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Life expectancy rise 'to increase pension age'

24 December 2012

The state pension age could be put back further by the government under plans to tie rises in with increases in life expectancy.

Chancellor of the Exchequer George Osborne is considering proposals to ensure Britons will have to wait even longer until they are able to draw their pension.

Professor Sir Michael Marmot, who is an international authority on the link between economic circumstances and health, told the Financial Times that the average age to which people could expect to remain in good health is about 64 for men and 66 for women.

Social variation

It was also pointed out by the expert that the average life expectancy figures mask a 16-year variation between those who live in the best and worst off neighbourhoods.

Sir Michael, director of the Institute of Health Equity based at University College, London, said: "Increases in pension age should be aligned with the health of the population rather than life expectancy to ensure people are well enough to work."

He explained that if the government chooses to bring in the age of retirement rises, those located at the bottom of the social ladder will have fewer years to benefit from pensions than those who are at the top.

Proportion of income

Michelle Mitchell, charity director of Age UK, stated the body is also concerned about the prospect of poorer people losing a greater proportion of their retirement income if the state pension age rose.

Ms Mitchell added that while the charity accepts the need for the coalition to introduce reform as life expectancy increased, an automatic increase linked to average life expectancy would not be supported by Age UK.

Data collected by LV= for the annual Working Late Index recently showed more women are going to be working past the state retirement age than men.

It revealed more than four million women over the age of 50 are expecting to retire later, which compares to  2.4 million men in the UK.

Those who are worried about their financial situation in their retirement may wish to consider using equity release plans to unlock money from the value of their home.

Getting in touch with the experts at Key Retirement Solutions can be a good first step towards boosting retirement incomes.