The change will see the State Pension age rise from 66 to 67 next year, with the increase due to be completed for all men and women across the UK by 2028
The State Pension age is due to begin its ascent from 66 to 67 next year, with the hike expected to be fully implemented for all UK men and women by 2028. This adjustment to the official retirement age has been on the legislative books since 2014, with an additional increase from 67 to 68 slated for implementation between 2044 and 2046.
The Pensions Act 2014 expedited the rise in the State Pension age from 66 to 67 by eight years. The UK Government also altered the phasing of the State Pension age increase, meaning that instead of reaching State Pension age on a specific date, individuals born between March 6, 1961, and April 5, 1977, will be eligible to claim the State Pension once they hit 67.
It’s crucial to be cognisant of these impending changes now, particularly if you have a retirement strategy in place. All those impacted by alterations to their State Pension age will receive a letter from the Department for Work and Pensions (DWP) well ahead of time.
Under the provisions of the Pensions Act 2007, the State Pension age for both men and women will climb from 67 to 68 between 2044 and 2046.
The Pensions Act 2014 mandates a regular review of the State Pension age, at least once every five years. These reviews will be guided by the principle that individuals should be able to spend a certain proportion of their adult life receiving a State Pension, reports the Daily Record.
A review of the proposed increase to 68 is due before the end of this decade. Originally, the then Conservative government had scheduled it to occur two years post the general election – which would have been 2026.
The review of the State Pension age will consider life expectancy along with a variety of other factors pertinent to setting the State Pension age.
Once the review has concluded, the UK Government may opt to implement changes to the State Pension age. However, any such proposals would need to pass through Parliament before they become law.
Checking your State Pension age online
Your State Pension age is the earliest age at which you can begin receiving your State Pension. It might differ from the age at which you can access a workplace or personal pension.
People of all ages can utilise the online tool on GOV.UK to determine their State Pension age, an essential step in retirement planning.
You can use the State Pension age tool to check when you will reach the State Pension Age, the age you will qualify for Pension Credit, and when you will be eligible for free bus travel.
Enhancing State Pension payments
HM Revenue and Customs (HMRC) recently revealed that over 10,000 payments totalling £12.5 million have been made by individuals using the new digital service to enhance State Pensions since its launch last year.
However, those eager to maximise their retirement income via the contributory benefit only have a few weeks remaining to fill any gaps in their National Insurance (NI) records dating back to 2006.
Typically, individuals are permitted to make voluntary National Insurance (NI) contributions for the six tax years immediately preceding the current one. However, in light of the April 5 deadline this year, contributors should note that the usual six-tax year restriction will revert to standard practice thereafter.
In a noteworthy departure from routine, the previous government had stretched the cut-off date for voluntary NI payments to April 5, 2025. This extension especially targeted those buffeted by the novel State Pension transition stipulations.
It envelopes the fiscal periods initiating on April 6, 2006, and ceasing on April 5, 2018. This extended timeline offers citizens augmented leeway to ponder their options and augment their pension provisions accordingly.
Only males born post-April 6, 1951, alongside females birthed subsequent to April 6, 1953, are sanctioned to top up their New State Pension through voluntary NI contributions. It’s crucial to recognize that certain individuals might qualify for NI credits instead, negating the necessity for direct remittances—hence, it’s advisable to review personal circumstances thoroughly.
For additional enlightenment regarding voluntary contributions, directives are accessible on GOV.UK here.
Bestinvest by Evelyn Partners’ personal finance analyst Alice Haine offered some insight: “People typically need at least 10 qualifying years of NI (national insurance) contributions to receive any state pension at all and at least 35 years to receive the full new State Pension – though they don’t need to be consecutive years.
“Plugging gaps can be quite an expensive process, so it is important to assess whether you actually need to buy back any missing years. This will depend on how many more years you plan to work, and whether you are eligible for NI tax credits, which fill the gaps, such as those who have been sick, were unemployed or took time out to raise a family or care for elderly relations.
“Plugging gaps in your record is relatively straightforward since the Government rolled out its new NI payments services in April last year – a State Pension forecast tool that has been checked by 3.7m since its launch.”
She continued: “People simply need to log into their personal tax account or the HMRC app to not only view any payment gaps but also check if they can plug those gaps directly through the Government’s digital channels.
“A short survey assesses the person’s suitability to pay online with those eligible to pay directly given a series of options to plug any gaps depending on when someone wants to stop working. Calculating whether to top up can be confusing though and ultimately there is no point paying for more years than you need because you won’t get that money back.”
Ms Haine concluded: “People who might need to top up include those that took a career break as well as low earners or expatriates living and working abroad. Remember, this deadline has been extended a couple of times in the past, which makes it more likely the Government will stick to the April cut-off point this time around. For this reason, those that think they might need to take action should start the process now.”
