People need to know about the change, and their entitlements, as they may be able to do something about it
A big change in the state pension is coming(Image: Getty Images)
The State Pension age in the UK is due to rise from 66 to 67, starting next year, with the change anticipated to be fully implemented for both men and women by 2028. This adjustment to the official retirement age has been planned since 2014, with a further increase from 67 to 68 scheduled between 2044 and 2046.
The Pensions Act 2014 accelerated the rise in the State Pension age from 66 to 67 by eight years. The UK Government also altered the phasing of the State Pension age increase, meaning that individuals born between March 6, 1961, and April 5, 1977, will be eligible to claim the State Pension when they reach 67.
It’s crucial to stay informed about these forthcoming changes, particularly if you have a retirement plan in place. Those affected by changes to their State Pension age will receive a letter from the Department for Work and Pensions (DWP) well in advance. For money-saving tips, sign up to our Money newsletter here
Under the Pensions Act 2007, the State Pension age for both genders will rise from 67 to 68 between 2044 and 2046.
The Pensions Act 2014 mandates a regular review of the State Pension age at least every five years. These reviews will adhere to the principle that individuals should spend a certain proportion of their adult life receiving a State Pension.
A review of the proposed increase to 68 is set to occur before this decade ends. The Conservative government had initially scheduled it for two years post the general election, which would have been in 2026.
The review of the State Pension age will consider life expectancy and other pertinent factors. Following the report from the review, the UK Government may opt to alter the State Pension age.
However, any suggested changes would require Parliament’s approval before becoming law.
Your State Pension age is the earliest age at which you can begin receiving your State Pension. This might not coincide with the age at which you can access a workplace or personal pension.
Regardless of their age, anyone can utilise the online tool on GOV.UK to check their State Pension age, which can be a crucial aspect of retirement planning. You can use the State Pension age tool to check:.
Check your State Pension age online here.
HM Revenue and Customs (HMRC) recently revealed that over 10,000 payments worth £12.5 million had been made by individuals using the new digital service to enhance State Pensions since its inception last year.
However, those aiming to maximise their retirement income through the contributory benefit only have a few weeks remaining to fill any gaps in their National Insurance (NI) records dating back to 2006.
Typically, people have the chance to make voluntary contributions for the preceding six tax years, but following the April 5 deadline this year, the usual six-tax year limitation will be restored.
In a decision by the former government in 2023, the deadline for making voluntary National Insurance (NI) contributions was prolonged until April 5, 2025, for those impacted by the new State Pension transition arrangements, which cover the period from April 6, 2006, to April 5, 2018.
This extension has given people additional time to weigh up their options and contribute where needed. Men born on or after April 6, 1951, and women born on or after April 6, 1953, can make voluntary NI contributions to enhance their New State Pension.
For some individuals, National Insurance credits could prove more advantageous than contributions, making it essential to examine all possible avenues.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, explained: “People typically need at least 10 qualifying years of NI (National Insurance) contributions to receive any state pension at all and at least 35 years to receive the full new State Pension – though they don’t need to be consecutive years.
“Plugging gaps can be quite a costly process, so it’s crucial to evaluate whether you actually need to buy back any missing years. This will depend on how many more years you plan to work, and whether you are eligible for NI tax credits, which fill the gaps, such as those who have been sick, were unemployed or took time out to raise a family or care for elderly relations.
“Since the government launched its new NI payments services in April last year, filling gaps in your record has become relatively straightforward – a State Pension forecast tool that has been checked by 3.7 million since its launch.”
She further stated: “People simply need to log into their personal tax account or the HMRC app to not only view any payment gaps but also check if they can plug those gaps directly through the government’s digital channels. A brief survey assesses the person’s suitability to pay online with those eligible to pay directly given a series of options to plug any gaps depending on when someone wants to stop working.
“Calculating whether to top up can be confusing though and ultimately there is no point paying for more years than you need because you won’t get that money back.”
Ms Haine went on to say: “People who might need to top up include those that took a career break as well as low earners or expatriates living and working abroad. Remember, this deadline has been extended a couple of times in the past, which makes it more likely the government will stick to the April cut-off point this time around. For this reason, those that think they might need to take action should start the process now.”