The retirement age could rise to 68 by the end of the 2030s, if Government plans under discussion are implemented.
The state pension age is already due to rise from 66 to 67 by 2028 but the next increase — to 68 — was not due to happen until 2046. However, an upcoming review is expected to consider bringing it forward and the decision could be announced as early as the March budget.
Every worker under the age of 54 could be affected by these plans, but those born in April 1969 and April 1971 will be most concerned, as they were heading towards a pension age of 67. Everyone will have to work a year longer under the plans, but those born after April 1971 were heading for a state pension age of 68 already.
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Ministers are planning to move that date forward as the population gets older and birth rates plummet, meaning there are few young people to pay the tax bill, but they face opposition from Work and Pensions boss Mel Stride, who is pushing for 2042 - arguing that predicted increases in life expectancy have failed to materialise.
And Chancellor Jeremy Hunt and Prime Minister Rishi Sunak were earlier this week warned they were “playing with fire” if the change came before the next general election, even though the move would bring billions for the UK’s struggling finances.
The head of retirement policy at AJ Bell, Tom Selby, told The Sun: “Rishi Sunak will be playing with political fire. The latest official data suggests average life expectancy improvements — the main justification for state pension age increases — have gone into reverse since the pandemic.”
The Department for Work and Pensions (DWP) said no decision has been made and the Government was required by law to review the state pension age regularly.
The rumours have sparked warnings that ill and poor people and carers will bear the brunt of the decision. "News reports that a decision may have already been made by the Government on further increasing state pension age are extremely worrying," says Caroline Abrahams, charity director at Age UK, told This Is Money.
"The people who will lose out the most are those unable to work due to ill health and caring responsibilities, as well as anyone who becomes unemployed in mid-life and then finds it impossible to get another job, due in part to a lack of training opportunities as well as rampant ageism in the labour market. As things stand, any decision by the Government to make today's 50-somethings wait longer for their state pension will consign hundreds of thousands of people to a difficult and impoverished later life."
Younger generations are also likely to struggle, as industry analysis reveals the state pension plus minimum auto enrolment savings mean they will barely scrape together a decent income in old age. MPs are also sounding the alarm that minimum savings levels under auto enrolment are too low, putting more than 60% of people at risk of missing out on an adequate standard of living in retirement. The minimum is currently 8% of salary in a band between £6,240 and £50,270, with contributions split between workers, employers and tax relief from the Government.
There are concerns that raising auto enrolment minimums could cause more workers to stop saving into pensions, especially at a time of soaring household bills. However, the opt-out rate remained low even during the pandemic.
When will I get my state pension?
Under the current rules, the age you can claim your state pension is:
- 62 years old and over today: 66
- 45 - 62 years old today: 67
- 44 and under today: 68
Does everyone get a state pension?
When you reach state pension age, you can claim if you've paid or been credited with enough National Insurance contributions during your working life. What you get depends on how many ‘qualifying years’ of National Insurance contributions you have. Each tax year (6 April to 5 April) that you pay or are credited with National Insurance contributions counts as a qualifying year, provided you earn or are credited with earnings of at least a minimum amount. This amount changes every year.
Is this change for all pensions?
The change is only for state pensions. Any private pensions you might have will have its own rules, although the minimum age to tap into private pensions will rise from 55 to 57 in 2028.
Can I top up my state pension?
If you don’t have enough qualifying years to get a full state pension, you may be able to make up gaps in your National Insurance contribution record by paying voluntary contributions. There is a time limit for doing this. You can find out more here.
Do I have to stop working when I start to claim my state pension?
You can choose to keep on working, whether paid or on a voluntary basis, while claiming your state pension. Any money you earn will not affect your state pension, but it may affect your entitlement to other benefits such as Pension Credit, Housing Benefit and Council Tax Reduction.
Does this mean I will have to wait until I am 68 to retire?
You can retire at any time, but you need to have a personal pension or retirement plan in place to support yourself as you won't be able to claim your state pension until the state retirement age.
How can I find how much I will get?
The maximum new-style pension you can get is £185.15 a week, or around £9,627 a year. This is going up by 10.1% from April, to £203.85. This Government tool is there to help you find out how many years of contributions you have, how much state pension you’ll get and the exact date on which you’ll receive payments.
Is there anything else I can claim?
People over state pension age and on a low income may be eligible for pension credit, worth an average of more than £3,500 a year. It also opens access to many other benefits, such as help with housing costs, council tax or heating bills, and extra cost of living payments.
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