Between late 2018 and late 2020, the state pension age for men and women rose from 65 to 66 (Image: Yui Mok/PA Wire)
The State Pension age is set to increase next year, but only individuals born in specific years will be impacted. The age was raised from 65 to 66 for both men and women between December 2018 and October 2020. Under legislation established in 2014, another rise is planned for next year. The Pensions Act 2014 fast-tracked the increase in the State Pension age from 66 to 67 by eight years.
The UK Government also modified the phasing of the State Pension age increase, meaning that people born on certain dates will be affected. Those born between March 6, 1961, and April 5, 1977, will be eligible to claim the State Pension when they reach 67. All those affected by changes to their State Pension age will receive a letter from the Department for Work and Pensions (DWP) well in advance, according to the MEN.
Under the Pensions Act 2007, the State Pension age for both men and women will increase from 67 to 68 between 2044 and 2046, reports the Liverpool Echo. The Pensions Act 2014 requires a regular review of the State Pension age, at least once every five years. These reviews will follow the principle that individuals should spend a certain proportion of their adult life receiving a State Pension.
A review of the proposed increase to 68 is due before the end of this decade. The Conservative government had originally scheduled it to take place two years after the general election, which would have been 2026.
Any reassessment of the State Pension age will take into account life expectancy along with other factors relevant to determining the State Pension age. Following the report from the review, the UK Government may choose to make alterations to the State Pension age.
However, any proposed changes would need to be approved by Parliament before they become law.
Your State Pension age is the earliest age at which you can start receiving your State Pension. This may differ from the age at which you can access a workplace or personal pension.
Anyone, regardless of their age, can use the online tool on GOV.UK to verify their State Pension age, which can be an essential part of retirement planning.
Boosting State Pension payments.
HM Revenue and Customs (HMRC) recently disclosed that over 10,000 payments totalling £12.5 million have been made by individuals using the new digital service to enhance State Pensions since its inception last year. However, those seeking to maximise their retirement income through the contributory benefit only have a few weeks remaining to fill any gaps in their National Insurance (NI) records dating back to 2006.
Ordinarily, individuals can only make voluntary contributions for the previous six tax years, but after the April 5 deadline this year, the standard six-tax year restriction will be restored.
In 2023, the former government extended the deadline for paying voluntary National Insurance (NI) contributions to April 5, 2025, for those affected by the new State Pension transitional arrangements, covering the tax years from April 6, 2006, to April 5, 2018.
This extension has provided people with extra time to evaluate their choices and make contributions.
Men born on or after April 6, 1951, and women born on or after April 6, 1953, are entitled to make voluntary NI contributions to boost their New State Pension.
Some individuals may be better suited for National Insurance credits rather than contributions, making it essential to examine available options.
Further information about making voluntary contributions can be found on GOV.UK here.
Working-age individuals can also review their State Pension forecast on GOV.UK here.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, said: “People typically need at least 10 qualifying years of NI (National Insurance) contributions to receive any state pension at all and at least 35 years to receive the full new State Pension – though they don’t need to be consecutive years.
“Plugging gaps can be quite an expensive process, so it is important to assess whether you actually need to buy back any missing years. This will depend on how many more years you plan to work, and whether you are eligible for NI tax credits, which fill the gaps, such as those who have been sick, were unemployed or took time out to raise a family or care for elderly relations.
“Plugging gaps in your record is relatively straightforward since the government rolled out its new NI payments services in April last year – a State Pension forecast tool that has been checked by 3.7 million since its launch.”
She went on to explain: “People simply need to log into their personal tax account or the HMRC app to not only view any payment gaps but also check if they can plug those gaps directly through the government’s digital channels. A short survey assesses the person’s suitability to pay online with those eligible to pay directly given a series of options to plug any gaps depending on when someone wants to stop working.
“Calculating whether to top up can be confusing though and ultimately there is no point paying for more years than you need because you won’t get that money back.”
Ms Haine further stated: “People who might need to top up include those that took a career break as well as low earners or expatriates living and working abroad. Remember, this deadline has been extended a couple of times in the past, which makes it more likely the government will stick to the April cut-off point this time around. For this reason, those that think they might need to take action should start the process now.”
