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The state pension age, which determines when millions can begin claiming their government pension, is set to increase to 67 starting this week, coinciding with a rise in monthly payments.
Currently at 66, the state pension age will gradually rise over the next two years until it reaches 67.
Individuals born between April 6 and May 5, 1960, will be the first to experience this change, facing a one-month delay in receiving their pension payments.
This adjustment is intended to align with increasing life expectancies, with many younger individuals anticipating working into their 70s. The government is currently reviewing potential future increases to the pension age.
Peter Bradbury, from Preston, will now be eligible for his state pension at the age of 66 years and eight months.
“It is annoying,” he told BBC Radio 4’s Money Box, reflecting on his earlier expectation of receiving 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.”
At a guitar group meeting in Liverpool, younger attendees expressed their belief to the BBC that the pension age will likely continue to rise.
Laura Williams, 38, from Netherley, who works in a school, stated, “By the time I get to [pension] age I will probably be around 70, I reckon.”
She voiced concerns about her potential quality of life at that age.
“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.
The increase from 66 to 67 is projected to save the Treasury approximately £10 billion annually by 2030.
Generally, individuals require 35 years of qualifying national insurance contributions to receive the full state pension.
The payment amount is set to increase by 4.8% in line with average wages, due to the triple lock policy. This translates to:
Some individuals may have gaps in their national insurance record due to factors such as living abroad or taking time off to care for children.
Charities have cautioned that the pension age increase will disproportionately affect areas with lower healthy life expectancy forecasts and will have a greater impact on lower-income individuals.
Official data indicates that men in Wokingham, Berkshire, can expect to be in good health until nearly 70 years old, and women until nearly 71. This contrasts sharply with Blackpool, where the figures are nearly 52 for men and nearly 53 for women in Barnsley.
“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,” said Laurence O’Brien, senior research economist at the Institute for Fiscal Studies, an independent think tank.
“There is a good case for future increases to the state pension age to come alongside targeted financial support for most affected groups.”
Past increases in the pension age have been met with controversy, particularly those that led to the Waspi campaign among women who argued they did not receive adequate notice of the changes.
According to the IFS, some individuals affected by pension age increases have had to rely on private pension savings to bridge the gap, while others experienced reduced life satisfaction.
A rising pension age has also correlated with a 10 percentage point increase in employment rates among affected age groups, primarily driven by workers remaining in their jobs for a longer duration.
The state pension age is currently legislated to increase to 68 between 2044 and 2046, although a review will assess whether to modify these dates.
Elaine Smith, head of employment and skills at the Centre for Ageing Better, noted that the rationale for repeatedly raising the state pension age is predicated on increased life expectancy.
“But life expectancy nationally is lower now than it was before the pandemic,” she said.
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.”
Listen to more on Money Box at 12:00 BST on Radio 4 or later on BBC Sounds.
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