Retirement Warnings: Work Until Your 70s

People are not saving enough and may have to work until well into their 70s to receive the retirement income they want, experts have warned.

One report, the Independent Review of Retirement Income (IRRI), has said people should be putting 15% of their lifetime earnings into their pension pot "to avoid future pensioner poverty".

Under workplace pension schemes, the minimum contribution as a percentage of earnings is currently set at 2% and will increase to 8% in the coming years.

The IRRI report follows a two-year study commissioned by Labour. The review is chaired by Professor David Blake, director of the Pensions Institute at Cass Business School.

It also warned pensioners withdrawing lump sums from their pension pots under new retirement freedoms introduced last year could become a "honey pot" for fraudsters.

Another report, from Royal London, found people making minimum workplace pension contributions from the age of 22 would need to work until 77 to be able to enjoy the sort of "gold standard" pensions enjoyed by many of their parents' generation.

This varies across the country due to different wage levels so that it would be as high as 81 in Westminster.

Former pensions minister Steve Webb, director of policy at Royal London, said: "It is great news that millions more workers are now being enrolled into workplace pensions, but the amounts going in are simply not enough to give people the kind of retirement they would want for themselves."

The warnings come as the Government launched a review of the state pension age - which experts think will see the benefit not being available until employees currently joining the workforce have reached their 70s - to be led by former CBI director general John Cridland.

The state pension age has already been undergoing changes since 2010 so that its long-standing level of 60 for women will equalise with men at 65. From 2018 it will rise for both and reach 67 by 2028 under Government plans.

Legislation requires the policy to be reviewed during each Parliament. This will be the first such review to take place.

It will not cover the existing timetable for changes up to April 2028. Mr Cridland will report in time to allow the Government to consider the recommendations by May 2017.

Financial services firm Hargreaves Lansdown said further changes were likely to mean it goes up faster than currently planned.

Tom McPhail, head of retirement policy at the firm, said: "Those joining the workforce today are likely to find themselves waiting until their mid-70s to get a payout from the state system."