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Daily Record
a day ago
- Business
- Daily Record
New State Pension age review could see people working longer before retirement
The UK Government has launched the State Pension Age Review, commissioning two independent reports due to be completed by 2027. Pension Credit – Could you or someone you know be eligible? The State Pension age is set to start rising from 66 to 67 next year, with the increase due to be completed for all men and women across the UK by 2028. The planned change to the official age of retirement has been in legislation since 2014 with a further rise from 67 to 68 set to be implemented between 2044 and 2046. The UK Governmen t has announced a new Pension Commission to investigate how to boost pension saving with its findings due to be published in 2027. Areas for consideration will include auto-enrolment saving rates, boosting saving among groups such as the self-employed and a review of the State Pension age. Dr Suzy Morrissey will report on factors the UK Government should consider relating to State Pension age and the Government Actuary's Department will prepare a report on the proportion of adult life in retirement. Commenting on the UK Government's plans to review the State Pension, including the age at which it is received, Social Justice Secretary Shirley-Anne Somerville, said: 'The Scottish Government has consistently warned the UK Government against raising the State Pension age more quickly than is needed. 'So, I welcome the fact the UK Government has committed to gathering more evidence before making any final decisions on a timeline. We look forward to the UK Government sharing their proposals with us and we will respond in due course. 'I am particularly keen to see that the difference in average life expectancies found across regions in the UK is fully considered. Otherwise, generations may be left behind, just as they have been before. 'While State Pension policy is reserved to the UK Government, we are committed to enabling older people to have a dignified retirement. That's why, for example, we are providing a Pension Age Winter Heating Payment to 720,000 more people this year, helping to ease the burden of rising energy costs.' Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: 'The Commission will look at state pension and whether the age at which we receive it should increase. Again, it's not an easy decision - we've seen increases in life expectancy slow down in recent years. There's also the issue of healthy life expectancy to consider. 'This currently hovers in the early 60s, so the reality is that many people cannot keep working into their late 60s. Any decision to increase state pension age further needs to take into account what needs to happen to help people remain in the workforce for longer, so they don't fall down the income gap between leaving work and taking their state pension.' She added: 'It's also an opportunity for the government to assess the long-term position of the Triple Lock. Speculation continues to swirl as to whether the Triple Lock's days are numbered but the cost of maintaining it will need to be balanced against the role it plays in helping workers, particularly those who are lower paid to meet their target retirement income.' State Pension age rise 2026-2028 The State Pension age rise from 66 to 67 will affect those born between April 6, 1960 and March 5, 1961. Anyone born between these dates is being prompted to check their State Pension age on here to find out the earliest point at which they'll be eligible for their State Pension. Check your State Pension age online Your State Pension age is the earliest age you can start receiving your State Pension. It may be different to the age you can get a workplace or personal pension. Anyone of any age can use the online tool at to check their State Pension age, which can be an essential part of planning your retirement. You can use the State Pension age tool to check: When you will reach State Pension age Your Pension Credit qualifying age When you will be eligible for free bus travel - this is at age 60 in Scotland Check your State Pension age online here. How to get full New State Pension Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, said: 'People typically need at least 10 qualifying years of NI (national insurance) contributions to receive any State Pension at all and at least 35 years to receive the full New State Pension - though they don't need to be consecutive years. 'Plugging gaps can be quite an expensive process, so it is important to assess whether you actually need to buy back any missing years. This will depend on how many more years you plan to work, and whether you are eligible for NI tax credits, which fill the gaps, such as those who have been sick, were unemployed or took time out to raise a family or care for elderly relations. 'Plugging gaps in your record is relatively straightforward since the Government rolled out its new NI payments services in April last year - a State Pension forecast tool that has been checked by 3.7m since its launch.' She continued: 'People simply need to log into their personal tax account or the HMRC app to not only view any payment gaps but also check if they can plug those gaps directly through the UK Government's digital channels. 'A short survey assesses the person's suitability to pay online with those eligible to pay directly given a series of options to plug any gaps depending on when someone wants to stop working. 'Calculating whether to top up can be confusing though and ultimately there is no point paying for more years than you need because you won't get that money back.' Ms Haine added: 'People who might need to top up include those that took a career break as well as low earners or expatriates living and working abroad."
Yahoo
a day ago
- Business
- Yahoo
Three key issues for the Pension Commission
A revival of the Pension Commission has long been touted as the solution to many of the challenges the retirement market faces. The last commission is credited with getting Britain saving into a pension through auto-enrolment – the bar has been set high and there is a lot to do. The Department for Work and Pensions has noted that 45% of working age people are not saving into a pension at all, so at the top of the agenda will sit issues such as whether auto-enrolment contributions need to rise – as well as how to get groups such as the self-employed to save more for retirement. These will prove tricky to tackle so the new commission has its work cut out. 1. Boosting pension contributions The issue of how, when and if to boost auto-enrolment minimums has long been on the table. However, it's not as simple as hiking rates across the board – the issue of pension adequacy means different things to different people. We don't want to be in a position where lower earners see their contributions hiked to the extent that they struggle in the here and now. Similarly, we don't want higher earners to save at minimum levels and receive a nasty shock when they get to retirement and realise their pension will not sustain the lifestyle they have been used to. Hargreaves Lansdown (HL) has analysed what people should be aiming for, using the HL Savings and Resilience Barometer. The most sensible approach is to use the living pension as a minimum income underpin – and layer target replacement rates over this, which could state, for example, that someone might aim for an income of two-thirds of their pre-retirement earnings. State pension and minimum auto-enrolment contributions should be set at a level that helps lower earners hit their target replacement rate and higher earners would be encouraged to contribute over and above these minimums to hit theirs. This analysis shows that the lowest earners are already reaching a decent replacement rate in retirement: middle to higher earners are the ones who need to save more to maintain their lifestyles. Here, the commission will need to assess what needs to be done to incentivise people to contribute more than these minimums where needed to build their retirement resilience. Engaging people with their savings will be the key to driving higher rates. Read more: How much money do you need to retire? As we run into the budget, any discussion around reform of pension tax relief needs to be treated with care. Tinkering with these incentives could lead to people putting less away for their future which could cost the state more in the long run. Stability in pensions tax is essential if people are going to be confident that the money they put away today, will be there for them decades into the future. 2. Self-employed The issue of the self-employed has been a huge issue: they aren't covered by auto-enrolment so don't benefit from an employer contribution and many are hesitant to lock money away until at least the age of 55 due to volatile earnings. HL has long championed the use of the lifetime ISA (LISA) for this group. The 25% government bonus acts in the same way as basic rate tax relief and any income can be taken tax free. There is also the ability to access money early from a LISA if needed, subject to a 25% exit charge. However, the 25% charge not only removes the effect of the government bonus but also a chunk of people's savings. Read more: How to make pension pots tax-efficient Reducing the charge to 20% would mitigate this and make the LISA even more attractive. Allowing people to open a LISA beyond the age of 40 will also help those who become self-employed later in life. We estimate that more than 1.2 million households with a basic rate tax paying self-employed earner could benefit from the proposed changes. 3. State pension age The Pension Commission will look at whether state pension age should increase. Again, it's not an easy decision – we've seen increases in life expectancy slow down in recent years. There's also the issue of healthy life expectancy to consider. This currently hovers in the early 60s, so the reality is that many people cannot keep working into their late 60s. Read more: How your health can affect your pension Any decision to increase state pension age further needs to take into account what needs to happen to help people remain in the workforce for longer, so they don't fall down the income gap between leaving work and taking their state pension. It's also an opportunity for the government to assess the long-term position of the triple lock. Speculation continues to swirl as to whether the triple lock's days are numbered, but the cost of maintaining it will need to be balanced against the role it plays in helping workers, particularly those who are lower paid, to meet their target retirement income. Read more: This under-claimed benefit could help boost your pension How far will your pension go as retirement costs soar? Should people keep working until later in life?Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Independent
2 days ago
- Business
- The Independent
Why state pension age could rise again
Liz Kendall, the Work and Pensions Secretary, has launched a new pension commission and announced a review of the state pension age, warning of a "tsunami of pensioner poverty" without major reform. The review opens the door for an increase in the state pension age, currently 66 and set to rise to 67 by 2028 and 68 by 2046, with economic think tanks suggesting an acceleration is likely. Research indicates that future retirees in 2050 are projected to receive £800 less per year than current pensioners, with 2 million already in poverty and numbers expected to rise. Kendall highlighted that almost half of the working-age population is not saving for retirement, exacerbated by high housing costs, and noted a significant gender gap in private pension wealth. The new commission will provide recommendations by 2027 on boosting retirement income, though it will not examine the triple lock, which costs £31bn annually, or the state pension age review.
Scottish Sun
3 days ago
- Business
- Scottish Sun
Women nearing retirement to get £5,000 a year less in private pension income than men, experts warn
Four in ten workers are under-saving for their golden years PENSION INEQUALITY Women nearing retirement to get £5,000 a year less in private pension income than men, experts warn Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) WOMEN nearing retirement can expect to get £5,000 a year less in private pension income than men, experts say. Fresh analysis shows they will typically receive around £100 per week compared to a little over £200 a week for blokes. Sign up for Scottish Sun newsletter Sign up 2 People deserve to know they'll have a decent income in retirement — but the truth is that is not the reality facing many, said Liz Kendall The greater likelihood of a history of part-time jobs and caring responsibilities may contribute to women getting less. Resulting lower National Insurance contributions could also curtail their state pension. The introduction of automatic pension enrolment from 2012 has helped women and men, the experts insist. But retirees in 2050 are predicted to have £800 — eight per cent — less private pension income than those today. Meanwhile, four in ten workers — nearly 15million — are under-saving for their golden years, with low earners and the self-employed hit the hardest, research shows. The Government will today revive the Pension Commission to address the findings. Work and Pensions Secretary Liz Kendall said: 'People deserve to know they'll have a decent income in retirement — but the truth is that is not the reality facing many. 'The Pensions Commission laid the groundwork, and now, two decades later, we are reviving it to tackle the barriers that stop too many saving in the first place.' The British Chambers of Commerce said that any costs to businesses on top of National Insurance contributions and the Employment Rights Bill would have to be 'gradual'. And they must be paused if economic conditions worsen, giving businesses time to adjust to increased costs, it added. Rain Newton-Smith, director-general of the Confederation of British Industry, said there must be a consensus in business, Government and society that the system is affordable for employers and workers. Pension expert on how to retire early- Scotish Widows
