The State Pension age in the UK is set to start rising from 66 to 67 next year
The State Pension age in the UK is due to begin its rise from 66 to 67 next year, with the increase expected to be fully implemented for all men and women nationwide by 2028.
This planned adjustment to the official retirement age has been part of UK law since 2014, with a further increase from 67 to 68 scheduled to take place between 2044 and 2046.
The Pensions Act 2014 accelerated the increase in the State Pension age from 66 to 67 by eight years, reports the Liverpool Echo.
The UK Government also modified how the increase in State Pension age is phased, 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 turn 67.
It’s important to be aware of these impending changes, especially if you have a retirement plan in place. All those affected by alterations to their State Pension age will receive a letter from the Department for Work and Pensions (DWP) well in advance.
Under the provisions of the Pensions Act 2007, the State Pension age for both men and women will rise 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. The review will be centred around the idea that individuals should be able to spend a certain proportion of their adult life receiving a State Pension.
The state pension age in the UK, currently set to increase to 68, is due for a review before this decade ends. The Conservative government had originally planned this review for two years after the general election, which would have been 2026.
The review will take into account life expectancy and other relevant factors when determining the State Pension age. Following the review, changes to the State Pension age may be decided upon by the UK Government.
However, any suggested changes must receive parliamentary approval before they can become law.
Regarding boosting State Pension payments, HM Revenue and Customs (HMRC) recently announced that over 10,000 payments totalling £12.5 million have been made through the new digital service to enhance State Pensions since its launch last year. However, those looking to maximise their retirement income through the contributory benefit only have a few weeks left to fill any gaps in their National Insurance (NI) records dating back to 2006.
The government has broadened the window for making voluntary National Insurance contributions, previously limited to the past six tax years. Now, in an effort to accommodate the transition rules of the new State Pension, individuals can address unpaid taxes dating as far back as 6 April 2006, up until the newly extended deadline of 5 April 2025.
This extension provides people with more time to consider their situation and make well-informed contributions if necessary. It’s applicable to men born on or after 6 April 1951 and women born on or after 6 April 1953 who want to augment their New State Pension amount.
For some, National Insurance credits might be more beneficial than direct contributions. Therefore, it’s crucial to explore all available options.
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Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, a digital investment platform, highlighted the significance of NI contributions towards pension benefits, stating: “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 added: “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 stated: “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.”
