State pension age brought forward
On the 19th July 2017, following an independent review from John Cridland, the government have brought forward the increase of the state pension age to 68 by 6 years to 2037-2039 from the original planned dates of 2044-2046 saying “this is the fair thing to do”.
With this announcement, individuals born between 6th April 1970 and 5th April 1978 will be affected by the change and will now see themselves needing to work a year longer before they will be able to receive a state pension. Further figures received from House of Commons Library state that 7.6 million will be £10,000 worse of with these changes.
One of the reasons behind John Cridland’s recommendation was the need for a balance in the costs of the ageing society across the generations as life expectancy is increasing and people will be surviving longer on a state pension then before. Those affected by these changes will on average continue to spend longer in receipt of the state pension that anyone in reaching State Pension age in the last 25 years.
The government state that the alternative would be to either pay a lower state pension which will impact on pensioner poverty or to ask the current working generation to pay more to support the income of pensioners
This announcement will come as a shock to many who will either have to work for longer or increase any existing private pension provisions to support their income if they still choose to plan to retire earlier. This would mean paying in increased contributions into their pension schemes per year.
With yet another change from the government regarding the state pension it does provide a lack of confidence from the younger generation whether there will actually be a state pension when they come to reach their state pension age, which leads to the importance of setting up personal pension schemes to release the pressure of relying on the state pension.