State pension warning for Brits aged 65 and under – ‘will come as a shock’ | Personal Finance | Finance
Brits aged 65 and under are being warned that the State Pension age is set to rise within weeks. The age at which people can draw their money rises from 66 to 67 from April this year.
Under transitional rules, Brits born between April 6, 1960, and March 5, 1961, will have a State Pension age (SPA) between 66 and 67. Tom Selby, Director of Public Policy at broker AJ Bell, said: “While the increase in the State Pension age from 66 will come as a shock to many, this is very much the beginning rather than the end of this story.”
Under Government plans, the SPA is due to increase again to 68 between 2044 and 2046. However, mounting costs in part due to the pensions triple-lock could force the current or a future government to bring the date forward.
Mr Selby said while the State Pension is the “bedrock” on which millions of Brits build their retirement plans, the sands are shifting.
He added that with the long-trailed hike to 67 completing in 2028, there would be a threat of confusion as many of those affected during the transition period would be unaware it’s happening and having to plug an income gap as a result.
The expert said: “Given the level of controversy we have seen when the State Pension age has increased previously, good government communications will be key over the coming months and years.”
The Department for Work and Pensions should send you a letter a month before your State Pension kicks in, telling you when and how to claim.
The Labour Government launched a review of the State Pension in July last year, with reports requested from Dr Suzy Morrissey from the Pensions Policy Institute and from the Government’s Actuary Department.
After receiving both reports, the Government should kick off a review of the SPA, though it may not reach its findings until some time after.
Mr Selby said: “With the total annual bill for state pensions now knocking on the door of £150billion and the ‘triple-lock’ threatening to ratchet that cost up over time, this is a painful nettle that will need to be grasped sooner or later. The longer politicians wait, the more painful the sting will become.”
