Government plans to raise the retirement age by up to six months per year are “flawed” but should serve as a “wake up call,” says the boss of one of the world’s largest independent financial advisory organisations.
The assessment by Nigel Green, founder and chief executive of deVere Group, which has 80,000 clients and $10bn under management, comes as it is reported that ministers are to encourage people to work longer to boost their retirement income, in order that they are less reliant on the State for medical and care costs.
Mr Green notes: “With the burgeoning pension’s crisis and looming health and care crises, understandably the government needs to do something radical.
“However, I believe these latest plans announced by the Department for Work and Pensions to increase the average retirement age by as much as six months every year could be flawed.
“These proposals will only really produce the desired outcome for the government if people are able to remain in and continue to be effective in their jobs. This is typically not the case for those individuals in the more manual or physically-demanding jobs.
“In addition, rightly or wrongly, many employers simply do not take on older workers. There is no evidence that this will change. It’s harsh, but the chances of being taken back into employment if you lose your job are usually reduced once you reach your mid to late 50s and beyond.”
He continues: “This measure is borne out of a desperate need to tackle the UK’s pensions, health and care crises and therefore must act as a wakeup call for everyone that retirement planning is increasingly a personal responsibility.
“With life expectancy increasing – meaning savings need to stretch further- the cost of living on an upward trend, increasing deficits in company pension schemes, the low interest rate environment, rising care and medical costs, and the fact that it is highly improbable that the State will be able to financially support retirees in the future as it has done for previous generations, we must all start putting money aside for our mature years as early as possible.
“There needs to be seismic shift in attitudes to saving.
“Failure to do so will likely result in people having to downsize retirement ambitions, or continue working – that is if they can find employment, which is not necessarily as easy for older people as the government would have people believe.
“These government plans are a reality check to get a robust, sound financial strategy in place sooner rather than later.”