The State Pension age review: how could it affect you?

The Government announced in July that it was conducting another review of the State pension age.

This will look again at the UK state pension age, which is currently 66 and is set to rise to 67 between 2026 and 2028.

This move could have profound implications for people planning for their retirement and on pension savings.

Here we look at what could change – and what you can do about it.

Why is the pension review happening?

The Government is required to conduct a review into the state pension age every six years.

The last review concluded in 2023 and the new one announced in July is due to finish in 2029.

The review will consider whether the current state pension age is still appropriate, based on factors such as life expectancy.

What happened after the last State pension review?

The 2023 pensions review agreed to increase the state pension age from 66 to 67 between 2026 and 2028.

Review author Baroness Neville-Rolfe recommended that the age should rise to 68 between 2041 and 2043. This was three years ahead of the previously planned date of 2044 to 2046.

However, the Government of the time decided not to implement this recommendation but to look again at the evidence in two years’ time – hence the review announced in July of this year.

What will happen with this pension review?

The new state pension review will look at key factors such as linking state pension age to life expectancy, its fairness between generations, as well as its role in ensuring the state pension’s long-term sustainability.

This could result in a recommendation to raise the state pension age higher and faster than currently planned.

The Government has stated that it will stick by a pledge to give ten years’ notice of a change in the pension age, meaning that when this latest review reports in 2029, the earliest it can recommend an increase in the state pension age would be 2039.

How could a change in the State pension age affect me?

Stating the obvious, by speeding up the planned increase in the state pension age by as much as five years, the Government will postpone the date that people currently aged 53 and under will be able to access their state pensions.

With the full state pension currently worth more than £12,000 – and likely to be worth more than that by 2039 – this could mean anything from people having to access more of their private pension earlier (if they have saved enough) to having to work a year longer than they had anticipated.

Either way, any increase in the state pension age is likely to throw something of a spanner in the works of those finalising their retirement plans in the next 10 to 15 years.

What can I do if the State pension age rises?

If you are currently aged 54 or older and were banking on the state pension age not changing before the dates previously announced, this shouldn’t alter your plans.

However, those aged 53 or younger could find themselves having to make some difficult decisions.

Although rises are introduced incrementally over a two-year period to ensure that those right on the cusp of state pension age under the previous regime do not miss out, you could still be out of pocket. This is particularly so if you’re in your late 40s and the state pension age is raised between 2039 and 2041.

This is where getting expert financial advice can really pay dividends.

Understanding your pension and planning for retirement

Speaking with a financial adviser can give you a clearer understanding of how your pension is performing. It will also show what actions you may need to take, especially in light of potential changes to the state pension age.

More importantly, a financial adviser can help you build a personalised retirement plan that aligns with your goals and circumstances. This guidance is delivered in a clear, straightforward way, helping you feel confident and in control of your financial future.

A well-structured financial plan offers more than just numbers, it provides clarity and direction. With the support of a financial adviser, you can expect:

• a strategy that makes sense to you
• advice tailored to your personal goals
• a clear view of your overall financial picture; and
• ongoing support to help you follow through

With expert advice and a clear plan, you’ll be better equipped to make informed decisions and feel confident about retirement.

Key takeaways

The pensions review could result in a delay in when you receive your state pension. Careful long-term planning with the help of a financial adviser can help you mitigate the effects and enjoy your retirement.

For further details on any of the issues raised in this article, please get in touch.

Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. Always seek professional advice before making financial decisions.