For most people in the UK, the state pension is a key part of their retirement planning. Traditionally,
the state pension age in the UK has been 65 for men and 60 for women. However, changes in recent
years have increased the age for both sexes.
Now everyone who has yet to reach state pension age, will only receive it 66 or after. Over the
coming decades, it will increase from 66 to 67 and then 68 for people who were born after 6 April
1978.
Possible future changes
For people born before 1970, there is unlikely to be further changes. There has been controversy in
recent years as many women have felt they were told too late about changes to the state pension age for
them. Therefore, the government is unlikely to make changes for people born in the ’60s.
However, never say never!
For people born between 1970 and 1978, the state pension age is currently set as 67. However, this
proposal by the government is trying to increase this to between 67 years 1 month and 68 over the
period.
Currently there are no plans to change it to over 68, however it is likely that it will continue to
increase in the future as life expectancies increase. The logic to increase the state pension age is as
follows:
• Historically people would only live a short time in retirement before they passed away (13.5
years in 1948). In 2017, they live nearly 23 years. This makes it more expensive.
• That cost has to be found somewhere, either by increasing taxes or increasing the age
people are eligible for it.
How do I check my state pension age?
Simple. Click here and you will go the Government State Pension page, that will tell you the current
age you will need to be before they pay you your state pension.
Anything else I should know?
The state pension normally increases each year and equates to around £9,100 for the full state
pension (2020/2021 tax year). To be eligible for the full state pension, you need to have worked (and
made National Insurance contributions) for 35 years in the UK.
If you have worked less than 35 years in the UK but at least 10 years, you will receive a partial state
pension. For example, if you have worked 10 years in the UK, you should receive about 28.5% of the
full state pension. If you have worked 20 years in the UK, you should receive about 57% of the full
state pension. If you have worked less than 10 years, you will not receive anything, however you
may eligible for some other state benefits.
It is important to remember that it is based on your individual National Insurance (NI) record. You
can check how many years you have already accrued (And how many more you need to accrue)
using another handy government website here.
The state pension is paid to individuals, so if you are a couple both with full pension entitlements,
you could receive over £18,000 a year (£1,500 a month).
The state pension is classed as taxable income, however as it is lower than the tax-free personal
allowance of £12,500, you normally won’t pay tax on it. It does mean you are more likely to pay
income tax on your other pension income.
If you want to understand more about pensions then please book an appointment with me using this
link.