Older people have been warned over the DWP making a big change for UK households.
DWP told to either raise state pension age or start means-testing payments
The Department for Work and Pensions has been told to either raise the state pension age OR means-test pension payments. Older people have been warned over the DWP making a big change for UK households.
New research shows 94 per cent of over-66s see the state pension as an entitlement. Stephen Lowe, group communications director at Just Group said: “As a result of rising longevity and dropping birth-rates, it is estimated that a quarter of the UK’s population will be aged 65 or older by 2050.
“This means that the burden of funding the state pension will fall on a shrinking proportion of working people.”
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Lowe suggested if the Government wants to avoid “increasing taxes or means-testing the state pension” it will have to look at options to “increase the age at which people receive the state pension or to moderate the amount paid.”
The expert explained that once a benefit is introduced, it becomes “extremely difficult” to cut or remove it.
And Lowe said: “Neither of these are political vote winners,” pointing out that expectations are deeply entrenched and hard to shift.
Lowe said: “As we have seen with the winter fuel and disability payments, once a benefit is introduced it becomes extremely difficult to reduce or withdraw that support.”
Lowe warned: “If the Government either limits the amount paid or pushes out the age at which the state pension age can be claimed, then some people will face a wider financial gap than they planned and will need to cover it from their own resources.”
Lowe said: “One of the best ways for individuals to prepare for this possibility is to build up private pensions and savings. The additional income required on top of the state pension to reach an acceptable minimum living standard – or even a moderate income in retirement – will be achievable for many people.
“The latest PLSA Retirement Living Standards show a couple where both are receiving the full State Pension will already meet the minimum income threshold.
“To bump that up to the PLSA’s moderate retirement living standard, they would need to create around £20,000 additional income per year combined, on top of the current full state pension.”