Kristen Zanoni  |  September 7, 2020

Category: Legal News

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A yellow binder labeled "Pension" on the spine lies with a calculator, pen and other paperwork - pension age

Some U.K. citizens’ retirement plans may be shattered as the government has announced the minimum private pension age will increase from 55 to 57 by 2028.

The pension age increase means 47-year-old early-retirement hopefuls will have to wait two more years to gain access to their savings, the Daily Mail reported.

However, the change does not affect the age at which state pensions are claimed. 

The current guidelines state that when a person turns 55 years old, they can reach into their private pension pot.

The first 25% taken out of the pension is not taxed. If a pension fund contains £30,000 or less, it is not taxed upon withdrawing from it, according to the Daily Mail.

If a saver takes out more than 25%, the funds are taxed as income.

Many people pay off debts with these funds. Pension owners can make as many withdrawals as they like. 

“In 2014 the Government announced it would increase the minimum pension age to 57 from 2028, reflecting trends in longevity and encouraging individuals to remain in work, while also helping to ensure pension savings provide for later life,” Treasury minister John Glen said in a statement, according to the Daily Mail. “That announcement set out the timetable for this change well in advance to enable people to make financial plans and will be legislated for in due course.”

The news of the pension age increase comes following news of people losing portions of their pension savings due to scams.

In the last decade, there have been major changes with state pension age, affecting many groups of people.

The state pension age has increased to 65 for women since 2010 to match the pension age for men, in a process is called equalisation, according to Express. 

The state pension system is divided into two parts that affect different individuals.

Red lockbox with words "pension fund" on front of lid - pension ageRetirees who have at least 30 years in National Insurance contributions can expect £134.25 per week in basic state pension payments.

Savers claiming the new state pension need to have contributed into the National Insurance pot for at least 10 years. These savers can receive a maximum of £175.20 per week.

The state pension age has slowly from 65 to 66 since December 2018. The next group that will be affected by the state pension age increases are those who were born between 6 October 1954 and 5 April 1960, Express reported.

But these incremental increases are not the last plans the government has in mind: More increases in state pension age are expected in the future, affecting more people approaching pension age. 

According to the government, the reason for the increase in state pension age is due to people in the U.K. living longer, the Independent reported.

Higher life expectancy for Britons means they are spending more years in retirement than in the past. Adjustments in state pension age needed to be made to account for that higher life expectancy. 

The state pension age will increase to age 68 sometime between 2037 and 2039, Express reported. These pension age alterations will happen slowly. 

Women of state pension age have been hit hard by the coronavirus pandemic, according to the Independent. The pandemic has left many struggling and poverty-stricken after job losses and other devastating events.

Despite their at-risk age, others who have not lost jobs have been forced to continue working during the pandemic. 

Nearly 4 million women born after March 1950 have been affected by the state pension age increase from 60 to 66, the Independent reported. Women’s pension age was increased for equalisation. 

A campaign group called BackTo60 is pushing for women to be repaid for pension payments missed by the changes, according to the Independent. The group lost a court battle with the government but has appealed the ruling. 

What is your opinion about the increase in pension age? Share your thoughts in the comments.

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One thought on UK Government Announces Rise In Pension Age

  1. A. says:

    I have been affected by the state pension age increase from 60 to 66.

    The pandemic has left many struggling and poverty-stricken after job losses and other devastating events.

    The rise is unfair because we were not given enough time to make adjustments to cope with years without a state pension.

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