In the past the previous chancellor, George Osborne, stated that the plan was for the earliest age that you could draw your benefits from your personal pension would be 10 years lower than the State pension age at that point in time.
However, the only legislation that is in force currently is to say that the minimum age for taking personal pension benefits is 55 and no further increases to the personal pension retirement ages have actually been set in stone.
But, that is not to say that this will not happen some time in the near future to keep personal pension retirement ages in line with those of the state pension (minus 10 years). In fact the Treasury has confirmed that it will push ahead with the changes to personal pension retirement ages and add them in to future legislation to keep them in line with state pension ages.
What this means in practice is that anyone who was born in 1971 may have the minimum age at which they can take their personal pension changed to 57. This is because the first date at which the State pension age changes to 67 is in 2028 and at that time, if they changed the personal pension age to 57, that would be for people who were born in 1971. So if you were born before 1971 then hopefully none of the changes will affect you.
So there is a group of people, if that is the case, whose state pension age is 67 but who may still be able to take their personal pension at age 55. These are the people who are born between 1961 and 1971.
However, as we say, all this is hypothetical until more legislation is enacted!
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.
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
If you were born in 1973 then you may be wondering what your retirement age is.
By retirement age in this context we mean state pension age, i.e. the date or age at which you are first allowed to claim your state pension and get the benefits that you have earned through your previous NI payments.
There may be different rules in place for what age you are able to draw your personal pension or workplace pension benefits and you will need to contact your scheme administrator if you are not sure, or check your documentation. Read More
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).
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.
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
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
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
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
When Can I Retire?