Workers will have to wait until they are 66 to receive their state pension under Conservative Party plans to raise the retirement age within the next seven years.
George Osborne, shadow chancellor, has outlined his party’s plans to give the state pension system an overhaul – including increasing state retirement age from 2016.
This is a decade earlier than currently planned. The government intends to increase state retirement age for women from 60 to 65 by 2020. After that, state retirement age for both men and women will increase to 66 in 2026, to 67 in 2036 and 68 by 2046.
If the Conservative Party is voted into power at the general election next year, then this increase will be brought forward by 10 years.
Hargreaves Lansdown estimates that around 3.4 million men and two million women will face a higher retirement age if the Conservative proposals come to fruition.
Bringing forward the planned state retirement age rise would also save a Tory government around £13 billion a year. Osborne also confirmed in his speech that his party will restore the link between earnings and the basic state pension - a move paid for by raising the state pension age.
Bodies representing pension providers support bringing raising the state pension age, agreeing with the Conservative Party that doing this sooner rather than later is reflective of rising longevity.
Maggie Craig, director of life and savings at the Association of British Insurers, says: "With people living longer, more active lives, it is right that the pension age should rise. Action is needed now, across the political spectrum, to deal with under-saving and people living to increasing ages in the future. Both will put a huge strain on the pensions system."
The financial burden of state pensions on the government is also a concern, adds Joanne Segars, chief executive of the National Association of Pension Funds.
However, the cost to pensioners has also sparked criticism. Dr Ros Altmann, an independent policy adviser and pension expert, slams the proposal as a money-saving initiative rather than the solution to the UK’s pension crisis.
“Yes, people need to be encouraged and enabled to work longer,” says Altmann. “But raising the state pension age does not achieve that. We need flexibility and more part-time work for people in their 60s and 70s.
"The sudden announcement of proposals to increase the state pension age to 66, with the aim of saving billions of pounds of public money, does not appear to be carefully thought through.”
Age charities, meanwhile, say it is unfair to raise the state pension age without also adjusting the default retirement age - currently 65.
Andrew Harrop, head of policy for Age Concern and Help the Aged, explains: "People should be encouraged, not forced, to work longer - the first step towards this is to scrap the default retirement age."
Harrop also warns that rising debt among the over 50s, alongside the impact of the recession on pension and savings funds, means many people will be reliant of the state pension.
"Coming at such a short notice, the Conservative Party's plans will disrupt many workers' legitimate expectations about their retirement."
Women will particularly suffer from such a move, as their state pension age will only be 63 at the time it is introduced – resulting in them having to wait an additional three years to receive their state pension.
Harrop adds that a 56-year-old woman would currently be expecting to retire in 2016 - but would have to wait a further three more years if state pension age is raised to 66 in 2016.