When will you be able to claim your state pension?

Since the 6th October, the age at which people can claim their state pension has risen to 66 for both men and women.    

There have been a number of things driving the increases in the pension age over the last few years, and women have been particularly affected by this as their state pension age has increased from 60 to 66 in that time.  For men the increase has been less extreme, with the age increasing by only one year from 65 to 66.

The primary factor driving the increase has been growing life expectancy.  By 2017, 85% of people were reaching the state pension age and the typical life expectancy for those who did was another 24 years. This means that pensions are now being paid for much longer than has historically been the case, and there were fears that they would become unaffordable if no action was taken.

There was also a feeling that the pension ages for men and women should be equalised, and unfortunately for women it was decided that the way to do this was for their pension age to be increased, rather than the men’s age being reduced.

It is also an attempt to boost the amount of 60-66 year old women in paid work and the evidence of the last few years is that the employment rates for women at these ages has been slowly rising.  There has also been an increase in the employment rate of 65 year old men who now have to wait a year longer to receive there state pension.

These changes do not mean those who were expecting a state pension cannot retire earlier, but they will require a different source of income until their state pension starts to be paid.  On the other side, employers can no longer force people to stop working simply because they have reached the state retirement age.

The government plans to increase the retirement age again from 2026 with a phased increase in the age from 66 to 67 over the following two years.   A further increase to 68 is currently anticipated from 2044 to 2046, but as the government is committed in legislation to undertake a review of the state pension age every six years, these current plans may be revised again depending on changes in life expectancy and the state of the governments finances. It is possible this increase could be moved forward from 2044 to 2037 so anyone born in 1970 or later could be affected by this.

The new state pension is currently worth a maximum of £175 per week (depending on how much you are entitled to and ensuring you qualify in the first place).  Some people will be entitled to receive more than this depending on their lifetime contribution record and whether they ever contributed at more than the standard rate.

With the state pension age increasing and with only around a third of woman and just under half of men in paid work at 65, many people are having to finance the start of their retirement through their own savings or investments.  There has been a recent rise in money management tools and investment strategies that are specifically tailored to allow people to calculate how much money then need coming in to pay the bills each month before their pension starts. 

Many retirees still also work, in many different roles such as consultancy, part-time jobs and other forms of flexible working, so retirement does not always have to mean retirement! 

If you are looking for advice or have any queries regarding your pension or retirement plan please contant your local Moore (South) office.