UK's Retirement Age May Be Increased by 2 Years for Every 3 Years Added to Life Expectancy - Report
© AP Photo / Alberto PezzaliPeople wear face masks as they sit on a bus, in London, Tuesday, Oct. 19, 2021.
© AP Photo / Alberto Pezzali
In 2019, the UK Office for National Statistics predicted that in 25 years, male life expectancy at birth would grow by 2.8 years to 90.4 years and female life expectancy would increase by 2.4 years to 92.6 years for those born in 2043.
The UK's retirement age will have to rise dramatically in the coming years for the country to avoid a debt catastrophe and severe strain on public services, The Telegraph reported, citing newly released Organisation for Economic Cooperation and Development (OECD) data.
According to the report, in a recent paper, the think tank argued that industrialized countries must take steps to keep more people working for longer periods of time.
Retirement ages reportedly "are not projected to keep up with projected gains in life expectancy anywhere in the OECD."
Retirement ages should climb by two-thirds of projected improvements in life expectancy, according to the report. Thus, for every three years added to life expectancy, the state pension age in the UK should rise by two years.
According to the OECD's research on aging populations, raising retirement ages in this way might stimulate the economy sufficiently to enhance living standards by 3% over the next three decades. This would also reduce the government's debt burden by 1.5 percentage points of GDP.
The state pension age in the UK has already begun to rise, with plans to raise it from 65 to 68 by the late 2040s, bringing men and women to equality in this matter.
According to the OECD, aging populations will put a major strain on government resources in the coming years.
"Average effective retirement ages are not projected to keep up with projected gains in life expectancy anywhere in the OECD,” per The Telegraph.
According to the OECD, a one-year increase in the pension age delays the average retirement by five months, as workers use their private pensions or savings to leave work before receiving full government support.
Analysts at the organization reportedly warned that unless adjustments are made, such as encouraging older generations to stay in the workforce and expanding female participation, rising healthcare, pension, and debt servicing expenses will equal to 8% of GDP for the typical country stipulated in the report.
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The OECD warning comes after the COVID-19 crisis, which saw UK government borrowing reach new highs and the national debt surpass £2 trillion (or $2.7 trillion).
The OECD think-tank covers its 38 member countries, the majority of which are wealthy industrialized ones.