The millennial generation could be forgiven for heaving a collective sigh of disappointment following the news that the state pension age is likely to be raised again. The new proposals put to government suggest that workers under 30 will not be eligible for a state pension until they reach the age of 70, and those workers who are currently aged under 45 will not receive a pension until they reach 68.
For the millennial generation, the only realistic option for those who would like to retire earlier than 70 will be for them to save up enough money and assets to fund an earlier retirement. However, with wage increases no longer keeping pace with inflation and with current house prices soaring well ahead of earnings, it is hugely difficult for this generation to be able to save for a pension or to acquire any assets of value such as a house. ‘Generation rent’ may well have to get used to the idea of both working and renting well into their late 60’s before any prospect of a final retirement. The 1980’s idea of Britain as a ‘home owning democracy’ is starting to come apart at the seams. Some millennials may be lucky enough to have the ‘bank of Mum and Dad’ to rely upon for a first start on the housing ladder but for the vast majority without this option saving for both a house and a pension is likely to prove increasingly difficult.
The ‘job for life’ has long since disappeared, but in the context of an extended working life for many millennials the concept of the ‘career for life’ is likely to disappear too. It is highly likely that to remain in the workplace many workers will have to at least re skill or more likely look at alternative career paths as we all try to adapt to the rapidly changing world of work.
The next generation coming up for retirement is the ‘baby boomer’ generation who had the advantages of free university education (so no tuition fees and student loans to pay back) and relatively low house prices (compared to average earnings) when they started out in the workplace. Notwithstanding these advantages most baby boomers will also get to retire at age 65 on a state pension that is currently protected by a ‘triple lock’ that will also not be available to future generations. The increasing perception of potential generational unfairness may come back to haunt the Baby Boomer generation. As the bumper sticker says “be nice to your kids... they choose the home you go into”
Two separate reports for the government have raised the possibility that millions of people may have to work longer to qualify for a state pension. An analysis for the Department for Work and Pensions (DWP) has suggested that workers under the age of 30 may not get a pension until the age of 70. A second report, by John Cridland, proposes that those under the age of 45 may have to work a year longer, to 68.