When will the State Pension age go up?

The State Pension age is unlikely to go up any earlier than 2040, a gov minister has said

News the state pension age is unlikely to rise to 68 will be welcome for those seeking to banish uncertainty from their retirement plans.

A week is a long time in politics, let alone 17 years, but the Work and Pensions Secretary Mel Stride has said it is likely to be ‘2040 or thereabouts’.

He said based on an independent review in 2017, the absolute earliest for an increase in pension age would be 2037, but that figure had been assuming people would live longer – but more recent data has suggested life expectancies in the UK have begun to stagnate.

The age Britons receive the weekly sum from the Government is already set to increase from 66 to 67 between 2026 and 2028, but a further change had been expected to take place shortly afterwards.

Earlier this year Mr Stride delayed a decision on when to increase the state pension minimum age to 68 until after the next general election.

None of this is a guarantee of course and political memories are short, but it may help people to plan a little better.

For example, considering whether they need to work until age 68, if they are able, whether full or part time.

Or if you were considering drawing down some money from a private pension pot, this may help you to plan when to do that.

It may also give some impetus to ‘beefing up’ any private pension plans and making them a little more attractive, if you wish to retire earlier than 2040 but would depend upon a State Pension to an extent.

Last week’s news of interest rates increasing to 4.5% could be good news for retired people considering an annuity, since rising interest rates also mean a better deal when it comes to swapping your pension pot for a guaranteed income, because annuity rates tend to go up with interest rates.

But anyone with debts, especially mortgages, will be finding that more of their income is going towards repayment, leaving less for savings and pension contributions.

Of course, both interest rates and inflation change on a regular basis – the extremely low interest rates seen in recent years were not the norm, so these are not necessarily the best foundations to base longer term financial planning on, but they shouldn’t be dismissed.

To work out the best options for you, seek professional financial advice so that you can plan your retirement.

More information and guidance about pensions is available from Pension Wise, an impartial service backed by the Government. Go to www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise.