The government has announced a review into State Pension age as part of its work on pension adequacy, with fears brewing that many won’t have enough in retirement.
It’s a move that could see the timetable shift, with a potential increase to age 68 to be brought forward from its current date in the mid-2040s.
We could also see a timeline announced for a move to State Pension ages of 69, 70 and beyond.
But what needs to be considered and is there anything you can do to prepare for any change?
This article isn’t personal advice. If you’re not sure what’s right for you, ask for financial advice. Remember, pension and tax rules can change, and any benefits depend on individual circumstances.
What will be considered in the review?
There’s multiple factors that’ll need to be front of brow as part of this review.
A key one is longevity – how long we’re expected to live.
The UK has an aging population and we’re living longer. The State Pension as a result has risen in cost, with more recipients and for longer. However, in more recent times there are signs this has started to slow.
The last review into State Pension was widely expected to recommend the move to age 68 be moved forward to the mid-2030s. This was shelved though until a clearer picture around how long we were living after the pandemic could be assessed.
The other key issue is that of healthy life expectancy – how long we can expect to live in a good state of health.
This has a massive impact on how long we can keep working, which in turn effects how much we can save into our private pensions and build entitlement for the State Pension.
The challenge is that healthy life expectancy currently hovers in the early 60s. People leaving the workforce at this time will also experience a gap of several years before they can access their state pension. Increasing the age only makes this more difficult and puts increasing pressure on our other pensions and savings to fill the gap.
The age at which you can claim the State Pension, and how much you’ll get, is different for everyone. Download our guide to fund out:
When you can claim the State Pension
How much income you might get
What happens if you were contracted out
Ways to boost your State Pension income
Plus much more
Two ways to prepare for potential change
An increase in State Pension age isn’t set in stone however.
Any recommendations from the review will take time to implement and the government needs to make sure people have adequate notice to give themselves time to prepare.
The best way to prepare for any potential changes is to make sure you are doing what you can to make the most of your own pension savings.
Find any lost pensions
Losing track of a pension is easily done, like when moving house and forgetting to update your contact details. So there could be a pension pot you paid into years ago that is now worth thousands that you aren’t aware of.
To find it, make a list of everywhere you have worked where you think you had a pension. If you don’t have paperwork for them all then call the national pension tracing service. You will need either the name of the employer or pension provider. The service can’t tell you if you have a pension with them, but they can give you contact details.
Consolidate your pensions
Bringing all your pensions under one roof can make it easier to manage and cut down on time, admin and even cost.
However, before you do so make sure you aren’t incurring unexpected exit fees or potentially missing out on important benefits like guaranteed annuity rates on old pensions.
Once you’ve got a handle on how much you currently have you can use an online pension calculator to see how much that might get you in terms of a retirement income.
If it’s enough to meet your needs then great, if not, you’ve got time to do something about it. Even taking small steps such as boosting your pension contribution every time you get a pay increase can make a huge difference.
One quick and easy way to help boost your retirement pot is to see what your employer can offer you.
Many will contribute at auto-enrolment minimum levels, but others are willing to pay in more.
Some will operate what’s known as a matching contribution, where they’ll boost their contribution if you boost yours.
This can mean a lot more goes into your pension with only a relatively modest uplift from you.
Along with supplementing your State Pension with any workplace pension, it could be worth thinking about using a private pension too, like the HL Self-Invested Personal Pension (SIPP).
Small actions like upping your pension contributions when you get a pay rise or new job is one way to boost your contributions.
The HL SIPP can help.
You’ll get access to a wide range of investments to pick from, including the HL Ready-Made Pension Plan, and a full range of retirement options.
And as well as getting tax relief, your pension can also grow free from UK income and capital gains tax.
Just remember, you also can’t access money in a pension until age 55 (rising to 57 in 2028).