Millions of people born after 5th December 1953 will see their state pension age rise from tomorrow as a result of reforms designed to cut billions from the UK’s welfare bill. The move represents the first state pension increase for men since the modern system was introduced post-World War II (1948).
Under plans set in stone by the Coalition Government in 2011, the state pension age for men and women will gradually increase from 65 to 66 between 6th December 2018 and 6th October 2020.
The increase is being introduced incrementally, meaning people will experience different state pension ages depending on when they were born.
For example, anyone born from 6th December 1953 to 5th January 1954 will have a state pension age of 6th March 2019 – meaning some have to wait up to three months longer to start receiving the payment.
Those born later will see a larger increase depending on their date of birth (see Table 3 below).
The state pension age is then due to increase to 67 by 2028 and 68 by 2039.
Tom Selby, senior analyst at AJ Bell, comments:
“A state pension age increase probably isn’t what most people asked for in their Christmas stocking, but that will be the reality for many people who are about to turn 65.
“The short-term impact on people’s finances could be significant. At the lower end, a three-month rise in the state pension age could cost someone over £2,000 in retirement income. Those who have to wait a full year longer could miss out on over £8,000 in state pension.
“While this might feel like a cruel lottery for those immediately affected, younger generations will need to prepare for rises in the state pension age to 67 and 68. Indeed, if life expectancy continues its long-term trend upwards a state pension age of 70 could well be on the cards.
“For most savers – and particularly younger people – the clear signal coming from the state is that if you want security in retirement, you need to provide it for yourself.”
Source: Department for Work and Pensions https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/310231/spa-timetable.pdf
