State Pension Age review due before 7th May 2017

SnowMan

A review of State Pension Age is set to take place before 7th May 2017 and subsequent reviews at least every 6 years. These reviews take into account increasing life expectancy and other factors such as healthy life expectancy, and differences in life expectancy between socio-economic groups. At least 10 years notice of a change of SPA is likely to be given.

The increasing life expectancy principles on which the State Pension Age will be further increased at these reviews is that people should spend, on average, up to one third of their adult life drawing a State Pension.

There is a technical note that explains in some detail how the one third of adult life in retirement principle will work in practice:
https://www.gov.uk/government/publications/future-state-pension-age-rises-dwp-background-note

The 2014 mortality projections which form the starting point for the review have been published today here

On the basis of these principles, assuming the central projection is used, and assuming my calculations are correct, the starting point for the review (before the other factors are allowed for) is that State Pension Age will increase from

- Age 65 to age 66 between 6th December 2018 and 5th September 2020 (already legislated for)

- Age 66 to age 67 between 6th April 2026 and 5th March 2028 (already legislated for, noting this is very close to what the projections give also)

- Age 67 to 68 around 2040, with a transition period perhaps April 2040 to March 2042, affecting those currently aged below about age 43; this compares to the legislated transition period of between 6 April 2044 and 5 March 2046.

- Age 68 to 69 around 2055, with a transition period perhaps April 2055 to March 2057, affecting those currently aged below about age 29.

GazHol

I don't see any mention of the minimum retirement age, I guess we can assume that it will also rise in tandem to remain state pension age minus 10 years?

jem16

SnowMan wrote: »

Age 65 from age 66 between 6th December 2018 and 5th September 2020 (already legislated for)

That would be brilliant.

SnowMan

GazHol wrote: »

I don't see any mention of the minimum retirement age, I guess we can assume that it will also rise in tandem to remain state pension age minus 10 years?

In their July 2014 reply to the Freedom and Choice in Pensions consultation the government stated

The government confirms, therefore, that it will increase the minimum pension age from 55 to 57 in 2028. It will remain 10 years below State Pension age thereafter

Consequently any bringing forward of the legislated increase in SPA from 67 to 68 coming out from the SPA review would reduce the normal minimum pension age to 58 to a correspondingly earlier date (under current plans).

dunstonh

From memory I don't think the increase from 55 to 10 years less than state pension age actually made it into the act in the end but remains an intention.

SailorSam

Are they going to take into account where you live.
I seem to remember something along the lines that a man in Glasgow will die 30yrs earlier than the average man living in Kensington London.
And i've got a cold, i'm not well. Maybe my time is up.

SnowMan

SailorSam wrote: »

Are they going to take into account where you live.
I seem to remember something along the lines that a man in Glasgow will die 30yrs earlier than the average man living in Kensington London.
And i've got a cold, i'm not well. Maybe my time is up.

https://www.gov.uk/government/publications/2010-to-2015-government-policy-state-pension-age/2010-to-2015-government-policy-state-pension-age

The review of the State Pension Age will be based on the principle that people should spend a given proportion of their lives receiving a State Pension and will take into account information from:

• the analysis by the Government Actuary’s Department of the proportion of their adult life that individuals in the future can expect to spend receiving State Pension
• an independently-led body, commissioned to produce a report on the wider factors that should be taken into account when setting State Pension age, such as variations in life expectancy

They haven't announced yet who will do the report on the wider factors. But that is the bit which presumably will cover different life expectancies in different geographical areas (although the GAD report may provide figures for proportion of time spent in retirement by area)

I don't think they could in a workable practical way allocate individual SPAs based on where geographically you live; how do you split up areas geographically and what about people who have moved about geographically?

The only practical thing they could do (that I can think of) is to allow people to take their state pension early (say from age 65 once SPA has increased above this) subject to a reduction, but that also has a number of knock on affects for example in terms of its interaction with the benefits system.

cns06

The min age thing really irritates me. I started my pension at 18 and I have worked full time since. At 30 years I will be 48 and by the time I will be 55 I will have been working full time for 37 years. That's enough for anyone in my books. But no the govt want me to work till I am 58. That's 40 years. In a physical job. Its ridiculous. I should be able to take my own pension whenever I damn well feel like it.

Lots of my friends didn't even start full time jobs till they were in their late 20s, well over 10 years behind me. They work in fairly comfortable jobs, in an office and they get great holiday pay etc. They will have no issue working till they are in their late 50s. By the time I am 50, maybe 55 my hips and back and knees will be shot. What then? Go on disability? Its a joke.

grey_gym_sock

cns06 wrote: »

The min age thing really irritates me. I started my pension at 18 and I have worked full time since. At 30 years I will be 48 and by the time I will be 55 I will have been working full time for 37 years. That's enough for anyone in my books. But no the govt want me to work till I am 58. That's 40 years. In a physical job. Its ridiculous. I should be able to take my own pension whenever I damn well feel like it.

but setting aside restrictions on when pensions can be drawn, is your savings rate high enough that you would be able to retire at 55? if it is, then the solution is simple: put some of your savings/investments into S&S ISAs, in addition to pension contributions. at 55, retire and cover your expenditure by drawing money from your ISAs - and that does not just mean spending the income: it is OK to spend the capital from the ISAs, because meanwhile your pension pot will growing, with the income generated inside the pot being reinvested. the ISAs need to last at least until you're 58, when you can start drawing on your pension. problem solved.

Lots of my friends didn't even start full time jobs till they were in their late 20s, well over 10 years behind me. They work in fairly comfortable jobs, in an office and they get great holiday pay etc. They will have no issue working till they are in their late 50s. By the time I am 50, maybe 55 my hips and back and knees will be shot. What then? Go on disability? Its a joke.

of course, you are entirely right about physically demanding jobs.

the answer is either to retire using ISAs if you can afford to (as described above), or to get a less physically demanding job if you can, or indeed to go on disability. that is what it's there for. the main problem with the last option is that the DWP's treatment of ppl with disabilities is becoming more and more unpleasant.

cns06

Its easy to just say - problem solved - but the reality is I was sold a policy which I could draw after 35 years service.

Its unfair to change the policy now. I am 18 years into my pension contributions. As far as I am concerned a contract is a contract - but hey its only money.

Your comment re ISAs is correct, I am having to save via other means. I was always planning on doing that anyway and we both started doing this around 5 years ago.

We have also just had to make a further investment in a property, to cover the gap. For all we know it might end up being 60 or 65 before we can take the pension so we are having to cover our bases.

So we are now "evil" landlords too - a load of hassle frankly we did not want.

Snakey

I wish they would hurry up and legislate the private pension access age so that I know where I stand. I'm 43 and no idea whether I'll be able to draw on my fund at 55, 57 or some age in between (or later, for all I know).

I am hoping that this intention will be overtaken by events - that they'll quietly leave existing pots alone and just make a stricter set of rules for the new-style pots, whatever form they may end up taking.

I appreciate that there are worse problems to have - my peers who 15-20 years ago were saying that they weren't going to waste their money on a pension are no longer so blithe about the prospect of never retiring - but I'd hate to be in a position where I should be able to afford to retire (funding the gap with ISA money) but can't risk it in case they move the goalposts when it's too late for me to change my plans.

I was planning to go at fifty, which is going to be a stretch as it is due to the market having thrown a spanner into the works re: buying property (and therefore paying off my mortgage) as early as I'd hoped.