A government initiated independent review by John Cridland in March has proposed bringing forward the move to a state pension age (SPA) of 68.
There was a time when men received their state pension at age 65 and women at age 60. Those numbers may still be locked in your memory, but they are heading towards their own retirement!
Currently a woman’s state pension age (SPA) is about 63, on its way to 65 by November 2018.
Just one month later both sexes will see their equalised SPA gradually rise to age 66 by October 2020. The following increase, to an SPA of 67, takes place between April 2026 and April 2028.
The report proposed that the change should occur between 2037 and 2039, seven years earlier than provided for in the existing legislation.
If the government accepts the suggestion, then you will be affected if you have not yet reached your 47th birthday.
No dates were mentioned for further SPA increases, although Mr Cridland did say he felt SPA should not increase more than one year in any ten-year period, assuming there are no exceptional changes to mortality.
In theory that could mean an SPA of age 70 arrives by 2059, which would catch the younger half of the Millennial Generation (often called Generation Y), born between 1980 and 2000.
The Government will publish its own report in early May 2017, drawing on Cridland’ s work and number-crunching undertaken by the boffins in the Government Actuary’s Department.
Not only is it likely to adopt something very close to the 2037−2039 window, but it may also follow another recommendation of Mr Cridland; namely the abolition of the triple lock increases to state pensions – introduced by the coalition in 2010 providing a guarantee to increase the state pension every year by the higher of inflation, average earnings or a minimum of 2.5%. The guarantee was introduced to protect pensioners from meaningless increases, such as the 75p a week increase that was given in 2000, and to make sure their income was not eroded by the gradual increase in the cost of living – from 2020.
Unless you are relaxed about an ever-receding state pension, now is the time to review your private pension planning arrangements. For pension advice please get in touch.
Please Note: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.
