Government Shakes Up Retirement With Increases to State Pension Age
Last week, the Government declared its intention to raise the state pension age to 68, seven years earlier than anticipated. Of course, this proposal still faces considerable obstacles before it can be voted into law and take effect, but the very idea of it should spur all pensioners-to-be to take a closer look at how these potential changes might affect them.
Currently, the state pension age is 65 for men and 64 for women, although this age will equalize at 65 for both genders beginning in 2018.
The Government had already established a timeline of progressive increases that would bring the state pension age for men and women to 66 in 2020 and 67 in 2028. The state pension age was slated to reach 68 between 2044 and 2046 under existing legislation, but now, the increase could occur as soon as 2037 to 2039. That means that up to 7.6 million people who are now in their 30s or 40s will have to wait an additional year before they are eligible to claim their weekly stipend—a tremendous setback to anyone’s financial plans.
According to the House of Commons Library, this proposed increase would save £74 billion, or £9,800 per each individual affected. Additionally, because the private pension age is linked to the state pension age, these increases mean that individuals with private or work pensions will have to wait before accessing them as well.
The plan has already met with fierce opposition from both Labour and the Scottish National Party.
Now, the same question is on everyone’s mind: Will this affect me?
The answer is simple and tied to your age. The millions of British men and women who will be impacted by this proposal are currently between 39 and 47 years old, so if you fall into that category, then you may have to wait an additional year for your state pension.
There is, however, a chance that this may not come to pass. The Government does not need to formally enact this change until 2023—one year after the next general election—so depending upon its outcome, the current proposal may become law or fall by the wayside.
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