State Pension Archives - Page 3 of 6

23 Mar

State Pension Age Increases- Will I be Affected?

For anyone who is keeping an eye on the State Pension age review they will be interested to hear that John Cridland’s report on the Review in State Pension Ages was published today by the government. The Pensions Act 2014 requires that State Pension ages are reviewed in every parliament and this review was due to report by May 2017.

Mr Cridland’s report also coincided with a review by the Government Actuaries Department (GAD) which was due to look at life expectancy and what percentage of people’s lives they would spend in retirement, therefore being more facts and figures based rather than taking into account other factors. The two reports will be taken into consideration by the government in any future legislative change in State Pension ages.

The benchmark guide that was used for both reports was the supposition that people should spend up to one third of their lives in retirement and with the increase in life expectancy this would obviously mean an increase in the State Pension age at some point. However, in order to decide on that point, various assumptions and predictions in life expectancy over the current decades would need to be made.

According to the State Pension age timetable issued by the Department for Work and Pensions in 2013:

The Government is not planning to revise the existing timetables for the equalisation of State Pension age to 65 or the rise in the State Pension age to 66 or 67. However the timetable for the increase in the State Pension age from 67 to 68 could change as a result of the review.

This means that anyone born before 6 March 1961 will not have their State Pension age changed any further. Anyone born after this date (as long as they are given at least 10 years notice) could have their retirement age increased. So any changes will only affect those retiring after 2028 at the earliest (but this is unlikely to be until much later according to the Cridland report).

The Cridland report advises that the increase in State Pension age from 67 to 68 is brought forward to 2037-39. Currently legislation is in place for the retirement age to be increased to 68 for those who were born after 5 April 1977 with a staggered increase from 67 to 68 for those born between 6 April 1977 and 5th April 1978.

With the changes proposed in the Cridland report this may now apply to people who were born after 1971 with a possible staggered increase for those born between 1970 and 1971*. So those people who are currently in their late 40s or below may be affected by an increase in their State Pension age.

The report also advises that further increases to the State Pension age are only effected no more often than every 10 years.

The report from the GAD proposes even earlier increases to the State Pension age and in theory the increase could happen at any time after 2028 but this is less likely to happen (we hope). The GAD report also proposes that anyone aged 30 or below (i.e. those born after 1988 as legislation will likely not happen or at least come into force next year) should have a State pension age of 70. With life expectancy increases this proposal could indeed become a reality, if not now, then possibly at a later date.

Summary

So if you are wondering if you are affected by the proposal in increases to the State Pension age then you may well be affected if you were born after 6th April 1970 and it is possible (but we believe much less likely) you will be affected if you were born after 5th April 1961.

However, these are currently just proposals and the government will need to review both reports and decide on any changes they wish to make before introducing any legislation which will likely not be law until at least 2018.

There will be another review of State Pension ages due in 2023 and so it is possible that any further changes to the State Pension age that go beyond age 68 will not be made until after this review when more recent figures on life expectancy are available.

*based on previous staggered increases

4 Nov

Interim Report on State Pension Age Changes

In March 2016 John Cridland CBE started a review of state pension ages for those people who would be retiring after April 2028. The review was required by the 2014 Pensions Act which said that state pension ages would be reviewed in each parliament session and this one was the first. As state pension ages for those retiring before 2028 are already set in law, there was no scope for any changes for those people.

Anyone whose retirement age falls before April 2028 will not be affected by any changes that may be proposed in this review, but those retiring after that date may see an increase in their retirement age.

In October 2016 Mr Cridland released an interim review document which called for the views of public and representative bodies so that they can have their input into the future of the state pension and how and when it is paid. The consultation period lasts until the end of December 2016.

The interim review is set to be forward looking in terms of the situation of future retirees, the change in demographics predicted in the future and in particular whether state pension age should be more flexible rather than at a fixed date for each person.

Those who are part of Generation X are most likely to be affected by the review of state pension ages.

The review separated people into 3 generations – Baby Boomers (born 1945-65), Generation X (born 1966-1979) and Generation Y (born 1980-2000). It is most likely that those who fall into the Generation X category will be more likely to be affected by this review as they will be the ones whose retirement age falls first in terms of those affected, and those who have the shortest amount of time to make any changes that they may need to with regard to retirement planning.

The terms of reference of the review meant that it needed to consider the three key pillars of Affordability, Fairness and Fuller Working Lives.

In terms of affordability, simply looked at, the state pension is paid for by the people who are working at that time and so the relationship between the number of working people to the number of retired people needs to be taken into account to assess the affordability (amongst other factors).

Fairness is in reference to the fairness of the amount of state pension paid to different generations, i.e. perhaps some people will consider that they are receiving less pension than their parents or grandparents, having paid in the same amount.

In taking into account fuller working lives, this should enable people to work longer, as the level of health and fitness of people increases compared to older generations at the same age.

Another key factor that we have posted about before is the fact that life expectancy is increasing which obviously means that if pensions were paid from the same date that they would need to be paid for longer and this would be more expensive. Part of the governments proposals on state pension ages was that it was expected that people would spend around a third of their working lives in retirement and obviously if life expectancy increases, this is likely to increase retirement ages when you take that into account.

The review is also looking in particular at those who may be most impacted – carers, the self-employed and people with disabilities who may find it hard to build up their own private pension and emphasis was put on getting feedback from those groups of people.

The review will conclude by May 2017 and it could be expected that we may see some more changes in retirement ages set out in legislation after that.

22 Sep

Retirement Age – Born in 1974

Born in 1974 (Updated March 2023)

If you were born in 1974 then you may be wondering at what age you are able to retire.

There have been many changes in State Pension age over the last few years and decades and it has become quite confusing to many people as to when they will be able to get their State Pension.

There may be different rules in place for when you are able to draw your personal pension or company pension benefits and you will need to contact the scheme administrator if you are not sure, or you could check your documentation. Read More

15 Jun

New Review of State Pension Ages

On 1 March 2016 the government instigated a new review of State Pension Ages for anyone retiring after April 2028. Currently anyone born between April 1961 and March 1977 has a retirement age of 67 so this may mean that any changes that the review brings up will affect anyone born after April 1961 and may increase their retirement age further.

Those born after March 1977 currently have a retirement age of 68 and so it is possible that this will be increased or else it is possible that a further age group is going to be given a higher retirement age. For the first time it might even be possible that a State Pension Age of 70 is introduced for those who are pretty young at the moment.

The purpose of the review is state as follows:

The purpose of the independent review of State Pension age is to make recommendations to the Secretary of State for Work and Pensions on future State Pension age arrangements. These recommendations should be affordable in the long term, fair to current and future generations of pensioners, and consistent with supporting fuller working lives.

The implications of this are that the State Pension Age will indeed be increased which would allow for longer working lives and also reduce the burden on the taxpayers as they are the ones that actually pay for the pensions in payment (as the system works on a Pay As You Go basis).

The review will be considering:

What a suitable State Pension age is, in the immediate future and over the longer term;
Whether the current system of a universal State Pension age rising in line with life expectancy best supports affordability, fairness, and fuller working lives objectives;
And, if not, how State Pension age arrangements might better support these objectives.

The review will consult with relevant parties and will come up with its findings by January 2017, so there is a while to go before any changes are announced and after this, legislation will need to be put in place for any of those changes to apply. this gives just over a year for that to happen as anyone affected by those changes needs to be given at least 10 years notice of changes to their State Pension Age, so they will need to be notified by 2018.

The review of state pension ages is an ongoing procedure and this will not be the last one. In fact the 2014 Pensions Act requires the State Pension age to be reviewed during each Parliament. This review is being undertaken by an independent appointee, namely John Cridland CBE who was most recently Director General of the Confederation of British Industry (CBI). He is currently Chair of the Board of Transport for the North. He has previously helped to negotiate the UK’s first national minimum wage, spent 10 years on the Low Pay Commission and he was also a member of the Advisory, Conciliation and Arbitration Service (ACAS).

6 Apr

Online State Pension Forecast Tool

HMRC have introduced a tool that will calculate your expected State Pension for you online. This was first introduced in 2016 in beta mode and has gone through some testing and is now a useful tool to see how much you might get when you retire based on contributions to date and future contributions.

In order to use the State pension forecaster you will need to have your identification verified. You can logon using a government gateway ID if you have one and you will then be sent an access code to your mobile phone to verify your identity.

The pension forecast tool worked pretty quickly for us – it came up with 2 figures – a weekly amount based on the current state pension and any future contributions you need to make (this is also converted to a monthly and annual figure) – and also a weekly amount based on National Insurance contributions paid to date.

It may be the case that the online system is unable to give you a current figure but in the majority of cases it can be a very useful tool to see what income you might be able to get and also what date this will be paid from.

You can also find out the following information:

your National Insurance number
details of your National Insurance record and years missed
how you can improve your state pension – i.e. you may be able to make up years where you have not paid enough NI.

This is a really quick and easy way to get an estimate of the amount of pension you may get and replaces the old system of sending off a form and requesting the amount although you can still request the information this way if you need to.

You can access the online pension forecast tool here.

23 Mar

Retirement Age – Born in 1972

Born in 1972 (Updated March 2023)

For those of you born in 1972, you may be wondering when is your retirement age?

There have been many changes in the last few years in terms of the age at which people can draw their State pension in the UK. Pension ages started at 60 for women and 65 for men but have already been equalised upwards for women and now both men and women are faced with retiring at ever higher ages. Read More

21 Mar

Retirement Age – Born in 1971

Born in 1971 (Updated March 2023)

If you were born in 1971 then you may be wondering when your retirement age is. And in this context we are talking about the age that you can take your State pension benefits in the UK.

There have been quite a few changes to retirement ages since the state pension was introduced when men retired at 65 and women retired at age 60. Since then retirement ages have been equalised between men and women and also increased. Read More

18 Mar

Retirement Age – Born in 1970

Born in 1970 (Updated March 2023)

The subject of retirement ages has become very complicated in recent years as the government sets out to equalise state pension ages between men and women. So if you were born in 1970 then you may be wondering when is your retirement age?

Initially men and women had retirement ages of 65 and 60 respectively but the retirement age was changed for women to 65 and subsequently for both men and women has been increased beyond this. Read More

17 Mar

Retirement Age – Born in 1969

When Can I Retire?

Were you were born in 1969 and you are wondering when you can retire?

Well it firstly depends on whether you are thinking about when you can take you personal or occupational pension benefits, or whether you are wondering when you can claim your state pension.

For non-state pension benefits, the minimum age at which you can start taking your money out is age 55 (apart from special situations like in serious ill health when other rules may apply). Although for some pensions you may not get penalised for taking benefits early so you may wish to wait as long as possible before claiming pension benefits. Read More

17 Feb

Retirement Age – Born in 1968

Born in 1968

Were you born in 1968 and are you wondering what your retirement age is? (And by retirement age we mean the age at which you can claim your state pension). If you are in this situation then it does not matter if you are a man or a woman as retirement ages have been equalised so you will both have the same retirement age. Read More

Category Archives: State Pension