Displaying items by tag: State Pension

The State Pension will rise by 2.5% in April, the Government has confirmed.

Ex-Pensions Minister and pensions campaigner Baroness Ros Altmann has called on the Government to consider allowing early access to the State Pension for those who need it, saying it is an issue of "social justice."

Nearly half (47%) of 55 to 64-year-olds are unaware that deferring the State Pension can boost their retirement income significantly when they start to claim their pension benefits.

Many pension savers are missing this valuable ‘Financial Planning’ option when they retire, according to research from retirement specialist Just Group.

Deferring the State Pension payment can mean significantly higher state pensions with every nine weeks of deferral boosting income by 1% - equivalent to 5.8% more income for every 52 weeks of deferral.

However, just over one in 10 (12%) of those aged 65+ had deferred their State Pension with the figure higher among women (16%) than men (9%) and also higher among the semi-retired (22%) than fully retired (11%).

Just says with Coronavirus hitting financial plans many more could consider State Pension deferral to boost retirement income.

Stephen Lowe, Just communications director, said: “Deferring State Pension is an important option for the rising number of over-65s in good health and who plan to carry on working.

“It needs to be factored into people’s Financial Planning in the run-up to retirement so it is worrying that such a high number of people aged 55-64 don’t know that there is a degree of flexibility around when and how they take their State Pension.”

According to research by Just the appetite for State Pension deferral has waned in recent years with about 1m people currently receiving extra money as a result of deferral, about 25% fewer than the peak in 2004, according to Department of Work and Pensions figures.

With the full New State Pension rising to £175.20 a week from April, deferring for one year would result in

£10.12 extra a week – more than £526 a year.

Those who have started to receive the State Pension can defer payment once during retirement.

Most people tend to defer the State Pension for between one and two years but more than half defer for longer.

Among those who chose not to defer, 31% said it was because they wanted to stop working as soon as they could. A quarter (25%) said they would have had to defer for too long to make the weekly increase worthwhile.

How long after you were eligible did you defer starting to receive your State Pension?
Up to a year -15%
1-2 years - 31%
2-3 years - 26%
3-5 years - 19%
5-10 years - 8%

Source: Just Group

Royal London has warned against a “drastic” proposal to raise the State Pension age to 75.

The Centre for Social Justice, a think tank chaired by former Work and Pensions Secretary and ex-Tory leader Iain Duncan Smith, recently published a report which recommended the change.

The rationale for upping the pension age to 75 by 2035 was cited as “removing barriers” for older employees and “health and wellbeing concerns”.

The report’s conclusion read: “ Removing barriers for older people to remain in work has the potential to contribute greatly to the health of individuals and the affordability of public services.

“Therefore, this paper argues for significant improvements in the support for older workers.

“This includes improved healthcare support, increased access to flexible working, better opportunities for training, an employer-led Mid-Life MOT and the implementation of an ‘Age Confident’ scheme.

“As we prepare for the future, we must prioritise increasing the opportunity to work for this demographic to reduce involuntary worklessness.

“For the vulnerable and marginalised, a job offers the first step away from state dependence, social marginalisation and personal destitution.”

In addition, provided that this support is in place, we propose an increase in the State Pension Age to 75 by 2035.

“While this might seem contrary to a long-standing compassionate attitude to an older generation that have paid their way in the world and deserve to be looked after, we do not believe it should be.

“Working longer has the potential to improve health and wellbeing, increase retirement savings and ensure the full functioning of public services for all. 

But Royal London’s Helen Morrissey cautioned against the approach.

The pension specialist said: “While such proposals will undoubtedly save money, raising state pension age so quickly will cause huge issues for many retirees who will not have been given adequate time to prepare.

“We need to give careful thought to what kind of jobs people in their 70s are able to do and while some people will be able to work on for longer others simply won’t be able to.

“These people will face severe financial hardship if they have not saved enough into a pension to cover the years between leaving work and claiming state pension.”

She added: “The Government needs to think carefully before taking such drastic action.”