Raising the state retirement age alone will not solve the challenges associated with increasing longevity; people need to save more, warn panelists speaking at an annual industry conference run by trade body the Pensions and Lifetime Savings Association.
Instead, participants should be saving 25% of their salary over the course of employment, said Lynda Gratton, professor of management practice at London Business School. Ms. Gratton was speaking at the annual Pensions and Lifetime Savings Association conference in Manchester, England, on Wednesday.
Ms. Gratton said life expectancy is rising while mortality rates are falling. For 50% of babies born in 2007, life expectancy in the U.S. averages 104 and in the U.K. at 103, she said.
In a panel discussion following her presentation, Ms. Gratton said a "variable pension age" would work better than a static state retirement age.
Other speakers on the panel agreed that the three distinct traditional phases of life — education, work and retirement — need to be reconsidered, with a move toward looking at life as multiple phases, such as going back to school or retraining for a new career.
However, Otto Thoresen, chairman at the £1.8 billion ($2.4 billion) National Employment Savings Trust, London, said many of NEST's participants do not have a possibility for a career made up of jobs with more than one company, or a "portfolio career," in which a participant is likely to have more higher-paying jobs and more retirement savings. According to Mr. Thoresen a better model could be to require participants to contribute more, but also to allow greater access to their defined contribution savings in the event of an emergency, for example. "This model could lead to higher contributions," he said.