State Pension Age Increase July 201719 July 2017
With the summer recess for Parliament starting on the 20 July 2017, there was just enough time to slip out a major change to the State Pension on the afternoon of the day before, just when no one was watching……except of course they were!
The headline is self-explanatory-, the rise in State Pension age to 68 will now happen in 2039, rather than 2046 as originally planned.
For those of us above age 48, this should not be a problem, however, for those between the ages of 39 and 47, they will have a different opinion. And this is a big switch of seven years, probably matching the liability reduction the government will see by making this significant change.
We have written recently, May 2017, on our blog page about the State Pension and its benefits and this can be found here: http://www.chaptersfinancial.com/news?month=5&year=2017
We noted that: You may remember that it is just over a year ago since the State Pension was overhauled at the beginning of the tax year 2016/2017. The 'fanfare' headline was that the equalised State Pension would be fairer and more importantly at a higher level than previously. The headline at the outset was about £150.00 per week, and in this tax year has settled out at a level of £159.55 per week. That's £8,296 per annum. The 'old style' State Pension offered a standard rate of £122.30 per week, but was often increased with other top-ups, such as SERPS (State Earnings Related Pension Scheme), Graduated State Pension and the like (which invariably is not now the case).
The big issue is that we have all been living longer. However, these longevity increases seem now to have slowed, even stalled, but not reduced, partly due to the recession apparently. More on this change can be found here, published by New Scientist the day before the State Pension change announcement: https://www.newscientist.com/article/2140907-rising-life-expectancy-in-england-has-slowed-since-recession/
Mostly, we are all living longer, and therefore the cost of maintenance of State Pension Benefits is higher….and clearly unsustainable. The need to make your own personal provisions, in whatever format or combination, is paramount. It is great news that over 8 Million people have now been enrolled into employers' pensions (Government statistic from July 2017), through pensions Auto-Enrolment legislation, many for the first time. The next phase of contribution increases is due to take place in April of 2018 and invariably the current minimum contribution levels being paid in are not enough to create a significant fund to rely on in retirement.
Whatever you do, and however you are affected by changes in legislation, get involved in planning your future income, but know it will be down to you (and hopefully your financial planner) to get it right.
No individual advice is provided during this blog.
Keith Churchouse FPFS
CFP Chartered FCSI
Chartered Financial Planner
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