Written by Steven Cameron, Pensions Director at Aegon
It will be a big relief to many if as reported, the Government has shelved plans to accelerate increases in the state pension age.
Having certainty and stability around when your state pension will commence is essential for future planning and official confirmation from the Government would be most welcome. There had been speculation that the state pension age might have been increased from age 67 to 68 a few years earlier than planned.
If this had happened in 2035 rather than 2038, it would have meant millions currently aged between 52 and 55 would have had to wait a year longer to receive it. From 6 April, the state pension triple lock will deliver a 10.1% increase for state pensioners. While just falling short of the 10.4% inflation rate announced today, it is still good news for state pensioners.
However, it comes at a high cost which is met from the National Insurance contributions of today’s workers. Many believed that to sustain funding, the Government would increase the state pension age sooner. However, life expectancy at retirement is now lower than previously assumed, which takes some pressure off the future cost of state pensions and avoids a controversial state pension age hike in the run-up to a General Election.