Pension Reform - Increases to the UK state pension age

For many increasing the age from which we can draw state pension will be unpopular, although it is widely-believed to be necessary, other countries have already or are making similar changes.

There are two reasons for this:

1. Average life expectancy is rising
2. The average age of the population is rising

If retirement ages are not increased the country could find itself in the position where there will be too few people working (and paying National Insurance) and too many people claiming pension benefits.

Individuals born before 1959 will not be affected by these changes*.

Individuals born after 1959, will be affected by these changes.

The first change is that the difference in pension ages between men and women is being abolished. The state pension age for women will be gradually increased from 60 to 65, starting in 2010:

*under the original 2008 Pension Reform Proposals.

New state pension ages for women

The next change is for the state pension age to be increased from 65 to 68:

New state pension ages for Men & Women

However, on 24^th June 2010 the new coalition government announced plans to bring forward the increase in state pension age for men to 66, possibly as early as 2016.  The state pension age for women is expected to be raised to 66 a few years later. Ministers will also examine the possibility of extending the age to 70 and beyond in the following decades.  Full details of the planned changes will be published shortly.

Individuals  will still be able to retire early if they want to, but  will have to be able to support themselves until they reach the new state pension age.

The desire to retire early could also influence the numbers who decide to remain auto enrolled into pension schemes.

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