What is proposed?
The Government wants to raise the age at which you can claim a state pension – to 66 for men by 2016, and for women by 2020 – in an attempt to tackle the rising costs caused by our ageing population.
What was the old plan?
Under Labour, the pension age for women was to rise to 65 by 2020 and to 66 for both sexes by 2026. It was then scheduled to rise incrementally, to 68 for both men and women by 2046. In June, the coalition launched a six-week public consultation to determine the new date. Ministers are expected to announce their findings soon.
How will increasing the age so soon affect those approaching retirement?
One of the main problems with raising the age is that people in their mid to late 50s who have made retirement plans may not be able to change their savings and private pensions to cover the loss of a year's state pension. The National Association for Pension Funds says the pensionable age should instead rise to 66 in 2020 for men and women. That would give people at least 10 years to plan and provide greater protection for those approaching retirement.
How can I prepare for a rise in state pension age?
Save as much as possible now. If you are relying on a state pension to provide you with a comfortable retirement you are likely to be sorely disappointed. This tax year the full basic state pension is £97.65 a week for a single person, or £156.15 a week for a married couple. The good news is there are no restrictions on the number of pension plans you can have at any one time, as long as your total contributions do not exceed your earnings. This means you can top up your pension either by making additional contributions to your existing pension plan, a new pension plan or by investing in a non-pension asset, such as an Individual Savings Account or portfolio of investments.
I can't afford to save more. What can I do?
Another option is to defer retirement, so you can give yourself more time to save.Reuse content