Workers approaching retirement have new worries that the state pension age will be delayed until their mid 70s due to an independent review requested by the government.
People currently under the age of 55 could be affected by the future changes, which the government is considering due to increases in life expectancy. State pension budgets will be unable to cope if people live longer but their retirement age stays the same.
State pension age changes may disrupt retirement plans
By April 2028, the pension age for men and women is set to rise to 67 years old, but pension experts predict that the review will lead to the state pension age increasing faster than expected after that. Owen Smith warned “the terms of this review may suggest that the Tory Government is set to speed up rises in the state pension age, throwing into chaos the retirement plans of millions of British workers.”
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State pension ages have already increased for millions of pensioners
For women, the state pension age has already increased from 60 until it reaches the male level of 65. From 2018, the state pension age will rise for both men and women until it is 67 years old for everyone by April 2028.
However, with the state pension now under review again, current and future pensioners are urged to keep themselves informed of new developments.
Timely information required for future pensioners
The government is being urged to give plenty of notice ahead of any change in the state pension age so pensioners don’t suffer from financial shocks when they retire. When the pension age for women was increased recently, many women over 50 were unaware of the changes and face sharp and unexpected rises with limited time to adapt their financial plans for retirement.
Any new changes planned by the government must be communicated very early and clearly so that people can plan for their retirement with clarity about when they will receive the state pension and how much it will be.
The review is due to be delivered in time for changes to be considered by the Treasury by May 2017.
Pension tax relief changes also reviewed
As well as the review of the state pension age, plans have been abandoned for a flat rate pension relief of as low as 25%, due to the political difficulty of introducing this. However, according to David Gauke, Chief Secretary to the Treasury, there may still be changes in this area as the government looks to ensure that “the costs of pensions tax relief are targeted in the right direction”.
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