In today’s Autumn Statement, it was announced that the state pension age rise will be accelerated, with the age now set to rise from 65 to 68 in the mid-2030s. This means that people in their 20s today could have to work until their 70s until they are eligible for state pension benefits.
At True Potential, we feel that the accelerated rise in the UK retirement age underlines more than ever that people in the UK can’t rely on any significant state support for their retirement. This reinforces the need for effective individual savings and investments provision in order to avoid a ‘pension time bomb’.
We recently surveyed over 2,000 people on their savings habits. Only 36 per cent were confident that they will have saved enough by the time they retire to live comfortably. 29 per cent also admitted that they are currently saving nothing for retirement.
People need to understand that if they don’t save now, they won’t be bailed out by a state pension in the future. A key part of this is that they must also save in the correct way – just two per cent of the people we surveyed are placing their funds in products that consistently beat inflation.
In order to encourage people to save more and in a way that adds value, our view is that the Chancellor should radically extend the stocks and shares ISA allowance to £25k. The move would boost savers and help the economy to grow even more quickly.