The government is currently phasing in the new state pension ages, affecting the retirement plans of millions
Thousands of men and women who had been looking forward to retirement have recently discovered the goal posts have moved due to government pension reforms.
For many years the age at which you can claim your state pension benefits has been 65 for men and 60 for women. But thanks to longer life expectancies costs have shot up for the Treasury, due to it paying some pensioners for more years in retirement than they spent paying National Insurance as workers.
To combat the issue, the previous Labour government set out plans to steadily increase the state pension age to 68 for both sexes. As a result, many men and women will qualify for the state pension at different ages over the coming years, but at the moment it’s specifically women who are being affected by the reforms. In fact, the last women to receive their state pension from 60 have already done so; between now and 2016 the qualifying age for women will rise to around 63; then between 2016 and 2018 it will rise to 65.
A shock to the system
Whilst understandable that the government needs to bring the state pension age more in line with today’s increased life expectancies, it does leave thousands of people having to re-evaluate
They are having to find alternative means of getting by until they reach their new state pension age. With a basic state pension currently bringing in £107 a week, it amounts to a loss of £5,587 a year for those who have been deferred.
Paul Wilson, Managing Director of Key Retirement Solutions, said: “Money is already tight for many people who are of, or approaching, retirement age. The delay in qualifying for a state pension could have a disastrous affect on people’s finances, which could take years for them to recoup.”
One concern is that people could be forced to turn to unsecured loans or credit cards to tide them over. Unlike younger generations, who can get a job or negotiate a pay rise to help pay off their debts, not all older people have this option. And with the average 55 – 64 year old still owing £55,804 on their mortgage*, the countdown to retirement could be significantly more stressful for some than others.
*Aviva Real Retirement Report Dec 2012