By Rob Starr, Content Manager, Big4.com
The Government’s expected state pension reforms have brought several comments from Raj Mody, head of pensions advisory at PwC.
“Even with the introduction of auto-enrolment, the younger generation can’t expect as much from their employer’s workplace pension as their parents or grandparents. This will heap added pressure on building up adequate savings. PwC research shows that a new graduate being auto-enrolled on the minimum requirements is only likely to end up receiving a third of their final salary as a pension, even after saving for their entire working life,” he said adding that greater simplicity and certainty on the state pension has to be good news for savers and pensioners. This will give people comfort about the base level of state pension they will receive, allowing them to plan more accurately for what additional savings they will need in retirement.
His other comments linked state pension age with life expectancy
“If the Government wants to link the state pension age with life expectancy, we expect a rise to age 68 may need to be brought forward at some point to around 2035 to keep pace with life expectancy projections. This means we could see the state pension age easily hit 70 by 2050,” he said.
“A school leaver just entering the workforce may have to start saving around £100 extra a month just to bridge the gap between the current state pension age of 65 and their likely state pension age by the time they reach that stage of their life, assuming they have no other source of income to rely on.”