If you are still under the impression that men and women will reach State Pension age at 60 and 65 respectively, you’d be wrong. State Pension age is rising - and rising fast.
Recent jumps in the average life expectancy of Brits has seen the Treasury pay out more to some pensioners than they put into the pot via National Insurance, so there seems to be a genuine need for the traditional pension ages to rise in line. However, critics of the rising State Pension age say that, in some places in the UK, it could rise above the average lifespan, and Age UK says that this can result in serious hardship for some individuals.
We take a look at the rising State Pension age, and what it could mean for you.
1. Women and men will have the same State Pension age by next year
At present, the plans are to bring women’s State Pension age in line with men’s (65) by 2018, and then increase both women’s and men’s qualifying age to 66 by 2020.
“These changes are supposed to simplify the system and reflect the fact that everyone is living longer and most people work for a significant period of their lives,” says Chris McCabe from First Target Recoveries, part of the Money Advice Group.
2. There are plans to fix the state pension age at 68 over the next few decades
By 2028, the State Pension age will rise to 67 for both men and women. This move will make a huge difference to some people’s plans for retirement.
In July 2017, it was announced that the rise in pension age to 68 will now be phased in between 2037 and 2039, rather than 2044 as originally planned. This will affect anyone currently aged between 39 and 47, and means that six million people will have to wait longer than expected to receive state pension.
It's expected that, eventually, the State pension age will rise to 70, although many think that these plans do not reflect that fact that some income groups and regions of the country do not have the same life expectancy as others.
3. Not everybody is entitled to the new full flat-rate State Pension
The full State Pension, which recently replaced a complicated two-tier system, currently stands at £159.55. This increases every year according to the Triple Lock system (although this could move to a Double Lock system in the future, as referred to it the recent election campaign). The Triple Lock guarantees that the basic State Pension will rise by a minimum 2.5%, the rate of inflation, or average earnings growth - whichever is highest. It was introduced in 2011 to stop trivial increases to payments such as the 75p a week increase in 2000.
But, not everybody is entitled to the new full, flat-rate State Pension and if you are approaching retirement age, it’s worth finding out what you would receive.
Chris McCabe says: “Until this April, British workers needed to have 30 years of relevant National Insurance contributions to qualify for the full weekly pay out. But anyone who has retired since that date will now need 35 years of contributions to claim the full State Pension, unless they opted out of paying for several years, in which case they may receive a reduced amount. This can be potentially counteracted by deferring the State Pension, and filling in any NI payment gaps.
“Anyone who has paid 10 years or more of National Insurance contributions will receive a proportion of the weekly amount, come retirement age.”
4. Forced retirement no longer exists
It's worth noting that the old default - or forced - retirement age doesn’t exist, and you can keep working after you have reached state pension age if you wish.
You will still receive your State Pension payouts while you work, as long as you’re of age.
You can find out how much pension you are entitled to, and at what age you can claim your State Pension, by visiting Gov.uk, armed with your National Insurance number and other personal details.