The recent changes in the retirement age have left people with insufficient time to plan their retirement, warned shadow pensions minister and Labour MP Rachel Reeves.
The minister was speaking on the occasion of the launch of Scottish Widows UK Pension Report 2011, and said the government’s proposal to raise state pension age to 66 years for men from 2016 will not give people sufficient time for preparation.
Ms Reeves mentioned about Lord Turner’s report which had suggested 15 years notice before any change in retirement age is effected in order to prevent losses to men over 50. Also “a pension policy institute came out with similar numbers in a report they published recently”, she added.
“The government should stick by those recommendations and give people the time they need to prepare for those changes”, she argued.
If the government’s proposed changes in pensions rules come into effect through the pensions bill, 500,000 women alone will be affected and have to wait a year more before they start receiving state pensions.
Some women will be worse off than others as they have to wait longer. “But 33,000 people – all women that are 56/57 years old at the moment – will have to wait exactly two years longer”, she said.
“Currently, the average women aged 57 has pension savings of £9,100 and if you annuitise that it comes to £11 a week, while the average man the same age has pension savings of £52,800, almost six times higher and the reasons for that are obvious”, she said adding: “but the point is that women will not have the time to make up the pensions savings and they are well on the way for their plans for retirement. They need the notice period to make the plans that they need for their retirement”.
The Scottish Widows report raises pertinent questions as people not only need to know what they will get in retirement but also “when retirement is if they are going to be saving an adequate amount”, she added.