The many changes to the state pension age has caused confusion and anger among thousands of people approaching retirement over the years. Since 1948 the state pension age for women was 60, whilst for men it was 65, then in the 1993 budget the then Chancellor Kenneth Clarke argued that it made sense for these ages to be equalised, given a women’s higher life expectance. The Pensions Act of 1995 was born, which would increase a women’s state pension age gradually from 60 to 65 between April 2010 and April 2020, but then in the Pensions Act 2011 this was accelerated meaning women would retire at 65 in 2018, two years earlier than originally planned.
These changes have caused great anger and disappointment for many women who were affected, because of the way that the state pension equalisation had been communicated. Women born in 1956, previously expected to retire in 2016 at the age of 60, now must wait until they’re 66, I’m not surprised they’re angry!
Many women who are affected say that they were not given adequate notice and time to rethink their retirement planning. A campaign group, Women Against State Pension Inequality (WASPI), has been petitioning the government to compensate them for what they argue is lost state pension payments. Their latest appeal to the High Court in September 2020 was rejected, but they fight on for their justice.
From December 2018 both men and women for the first time, have a state pension age of 65, and now both men and women’s state pension ages will increase together. In October 2020 the state pension increases to 66 and will gradually rise to age 67 between 2026 and 2028. In July 2017 the government announced further intentions to increase the state pension age from 67 to 68 between 2037 to 2039, seven years earlier than previously planned.
It’s disappointing, I am affected just like you, but it’s no surprise. When the State Pension was introduced in 1948, a 65-year-old could expect to spend 13.5 years in receipt of it. This has been increasing ever since. In 2017, a 65-year-old could expect to live for almost another 23 years, and in 2037 it is expected to be 25 years.
It’s important to ensure you are aware of this so there are no surprises when your retirement day comes. I encourage you to obtain a state pension forecast, to show you how much you’ll receive and when. You can check your state retirement age using the government’s own site www.gov.uk/state-pension-age.
What’s spoken about less, is the increase in the minimum age to access your own pension arrangements. When I started as a financial planner, you could take benefits from your personal pension from age 50, then the Finance Act 2004 introduced a change to increase the minimum age to 55 starting from April 2010.
The government has stated that the minimum pension age will increase to 57 in 2028, when the state retirement age increases to 67. The minimum pension age will increase as the state pension age increases, always maintaining a 10-year differential between minimum pension age and state pension age in future years.
These increases reflect trends in longevity and encouraging individuals to remain in work while also helping to ensure their pension savings provide for later life.
If you were born before April 1971, the earliest you can access your pensions is age 55, born after April 1971 then this increases to age 57, and if you were born after 1981 it will be from age 58.
The reality is that very few people can afford to retire at age 55 or 60 for that matter, but the point is knowledge is power, let’s make sure you’re aware of what you can do!