State pension age under review – how will current planned hikes impact you?

Retirement expert advises people to learn about state pensions

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The setting of the state pension age is a vitally important decision, as it will have a huge impact on when millions of Britons are able to retire. Changes to the state pension age are coming, but a Government review is underway to determine whether these are appropriate.

The state pension age is currently set at age 66 in the UK.

However, changes to the state pension age have been scheduled which will increase the threshold in the future.

Two hikes are currently planned, taking the state pension age to 67 by 2028 and 68 by 2046.

Increases to the state pension age are designed to reflect a longer life expectancy in the UK.

If people live longer and the state pension age stays the same, the cost of funding the state pension to the taxpayer would rise.

This is the basis of why state pension age increases occur.

State pension age is the earliest age at which Britons can start receiving their state pension entitlement.

The full new state pension is worth £179.60 at present, but it increases every year due to the presence of the triple lock policy.

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Therefore, when future retirees reach state pension age, it should be worth more than it is today.

A Government review into the state pension age is underway, which will conclude by May 7, 2023 at the latest.

Some observers have argued that the state pension age changes should be put on hold, as the COVID-19 pandemic actually caused life expectancy in the UK to drop slightly.

The Pensions Act 2014 dictates that the state pension age must regularly be reviewed to determine whether it is appropriate.

The Government has stated on the Gov.uk website that it will base the review on “the latest life expectancy data and other evidence”.

In conducting the review, the Government has pledged to do the following:

  • Examine the implications of the latest life expectancy data
  • Provide a balanced assessment of the costs of an ageing population and future state pension expenditure
  • Consider labour market changes and people’s ability and opportunities to work over state pension age
  • Develop options for setting the legislative timetable for state pension age that are transparent and fair.

The threshold applies equally to both men and women, but they have not always had the same state pension age.

Previously, women were able to get their state pension five years earlier, at age 60, compared to 65 for men.

But the state pension age was later equalised across genders by increasing the women’s state pension age to 65 in line with the men’s age.

The state pension age for both men and women was then raised to today’s level of 66.

Britons can find out when they are currently due to reach state pension age via the Government website.

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