State Pension Age Begins Rising to 67
From Monday, the age at which millions of people can claim their state pension will begin to increase from 66 to 67. Alongside this change, monthly pension payments will also rise.
The current state pension age is 66, but this will gradually increase over the next two years until it reaches 67. The first individuals affected by this change are those born between 6 April and 5 May 1960, who will now have to wait an additional month before receiving their pension.
This adjustment reflects longer life expectancy, with many younger people expecting to work into their 70s. However, the government continues to review the possibility of further increases in the pension age.
Personal Impact of the Pension Age Increase
Peter Bradbury, from Preston, will become eligible for his state pension at 66 years and eight months.
"It is annoying," he told BBC Radio 4's Money Box, having thought as a young man that he would have eventually got his pension at 65. "I'll do some other work and I can't travel as much as I wanted to. "In terms of day-to-day expenditure it doesn't affect it that much, but all those little extras you would expect have gone."
Concerns Among Younger Generations
At a guitar group meeting at the Florrie in Liverpool, some younger attendees expressed their belief that the pension age will continue to rise in the future.
Laura Williams, 38, from Netherley, who works in a school, said:
"By the time I get to [pension] age I will probably be around 70, I reckon."
She voiced concerns about the quality of life she might have by then.
"The things you might put off doing until you have got the freedom, and maybe the finances, to do it, your body might not be able to do by then," she said.
Financial Implications and Eligibility
The increase from 66 to 67 is expected to save the Treasury approximately £10 billion annually by 2030.
Generally, individuals need 35 years of qualifying National Insurance contributions to receive a full state pension.
The amount paid will increase by 4.8% within days, in line with average wages, due to the triple lock policy. This policy ensures pensions rise with the highest of average earnings growth, inflation, or 2.5%.
Some people may have gaps in their National Insurance record, for example, if they have lived abroad or taken time off to care for children.
Impact on Different Communities
Charities have highlighted that the pension age increase will have a more significant effect in areas where forecasts for healthy older age are shorter, and it will disproportionately impact those on lower incomes.
Official statistics indicate that men in Wokingham, Berkshire, can expect to be in good health until nearly 70 years old, and women until nearly 71. This contrasts with men in Blackpool, who have a healthy life expectancy of nearly 52 years, and women in Barnsley, nearly 53 years.
Laurence O'Brien, senior research economist at the Institute for Fiscal Studies (IFS), an independent think tank, said:
"The people most affected are often those least able to adjust through staying in work or drawing on other savings, for example those already out of work or in poor health. "There is a good case for future increases to the state pension age to come alongside targeted financial support for most affected groups."
Controversies and Effects of Previous Increases
Previous increases in the pension age have been controversial, notably leading to the Waspi campaign among women who claim they were not given adequate notice of the changes.
The IFS notes that some people affected by pension age rises have had to rely on private pension savings to bridge the gap. Additionally, these increases have been linked to lower life satisfaction among those impacted.
However, a rising pension age has also contributed to employment rates among affected age groups increasing by 10 percentage points, primarily due to workers remaining in their jobs longer.
Future Pension Age Plans and Reviews
The state pension age is legislated to rise to 68 between 2044 and 2046, although a review is underway to consider whether these dates should be changed.
Elaine Smith, head of employment and skills at the Centre for Ageing Better, commented on the rationale behind repeated pension age increases:
"The rationale for repeatedly raising the state pension age was based on people living for longer. "But life expectancy nationally is lower now than it was before the pandemic," she said.
Government Support for Those Affected
A spokesman for the Department for Work and Pensions stated:
"We're committed to providing financial support for people at any age who need it. "Those that have not reached state pension age can access a range of support such as universal credit and other means-tested and disability-related benefits."
Listeners can hear more on Money Box at 12:00 BST on Radio 4 or later on .
