State pension age rise ‘perhaps not quite as imminent’ as predicted | Personal Finance | Finance
The current age when Britons can claim their state pension is 66 for both men and women, with analysts warning it could go up to 70 as the policy becomes more expensive for the Government. State pension payments are to increase by 10.1 percent in April as the triple lock policy has been reinstated.
The current plans are for the state pension age to go up to 67 by 2028 and then to 68 between 2044 and 2046, with some experts saying the age hike could be brought forward.
Baroness Neville-Rolfe is to publish a review into the policy by May this year, which is required every six years as set out in the Pensions Act 2014.
Becky O’Connor, director of Public Affairs at PensionBee, told Express.co.uk the review will likely not focus on whether the state pension age should go up sooner and when, but rather if it is right there should be a proportion of a person’s adult life they spend over the state pension age.
She explained: “This then becomes a little more philosophical, with other factors likely to come into play, such as the forecast adequacy of defined contribution workplace pensions; the frequency of health issues that prevent work among those in their late sixties, and so on.
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“The review is still widely expected to recommend bringing increases to the state pension age forward from 2044 to 2046, but perhaps not quite as imminently as 2028 to 2030.
“Another rise so hot on the heels of the rise from 65 to 67 would be quite a culture shock and yet another blow to those hoping to wind down work.
“It could also entail an increase in the pension access age. This goes up from 55 to 57 in 2028, but could also be increased to 58.”
Experts at AJ Bell have warned younger savers should prepare for the fact they will not get payments until they turn 70.
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The group’s head of retirement policy, Tom Selby, said: “Maintaining the current proportion of the population living up to and beyond state pension age would require an increase in the state pension age to 68 by 2034, 69 by 2038 and 70 by 2042, according to the International Longevity Centre, a highly respected think-tank.
“On-the-other-hand, ensuring one third of adult life is spent in receipt of the state pension would push back the planned increase to age 67 to 2040 – but cost the Treasury billions of pounds.
“Given these challenges, the easiest move both politically and fiscally may be to stick to the existing timetable.
“The decline in life expectancy projections means this could boost the Treasury’s coffers while potentially avoiding a fatal electoral fallout.”
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“Personal pensions can be accessed at age 55 currently, increasing to age 57 in 2028. The value of tax relief and employer contributions can really help to build up savings.
“Extra savings could be made to “bridge” the gap between retiring and state pension age. This may include ISAs/bonds/OEICSs as well as pensions and will need to for those wanting to retire earlier than 55/57.
“It’s key to have this planned out as early as possible, as the earlier you start the less you have to save. This is where good quality financial advice can play its part to create and implement that plan.”
People build up their state pension entitlement by paying National Insurance contributions or with credits.
A person typically needs at least 10 years of contributions to claim any state pension and needs 30 years of contributions for the full basic state pension and 35 years of contributions for the full new state pension.
A DWP spokesperson recently told Express.co.uk: “No decision has been taken on changes to the state pension age.
“The Government is required by law to regularly review the state pension age and the second state pension age review is currently considering, based on a wide range of evidence including latest life expectancy data and two independent reports, whether the rules around state pension age remain appropriate. The review will be published in early 2023.”
