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Latest News State pension age reaches 66

State pension age reaches 66

State pension age reaches 66

This article was updated in October 2021

The latest phasing of State Pension Age (SPA) increase is now finished.

On 6 October 2020, the SPA reached 66. Unless current legislation is changed, it will remain there until 6 April 2026. After this, the next increase, to age 67, starts to be phased in over the following two years. Following this, the move to raise it 68 is less certain.

Over two years ago the Department for Work and Pensions (DWP) announced that the phasing to 68 would start in April 2037 and again run for two years. However, at the time the DWP avoided introducing any legislation, saying that it would undertake a review of the latest life expectancy projections before acting. Since then, the Secretary of State at the DWP has changed three times, but there has been no news of a review. Meanwhile the rise in life expectancy has slowed dramatically, suggesting that the step up to 68 may be delayed.

The arrival of an SPA of 66 prompted the Institute for Fiscal Studies (IFS) to publish a briefing note examining the impact of the SPA changes to date. These started with the controversial stepped increase in women’s SPA from 60 to 65 between April 2010 and November 2018. With the help of DWP data, the IFS showed that each year’s increase in women’s SPA produced a corresponding increase in the proportion of women remaining in work.

For example, the employment rate of 65-year-old women jumped from 21% in the third quarter of 2018 to 35% in the second quarter of 2020 as they were no longer able to claim a state pension. For 65-year-old men, there was also a sharp rise over the same period, from 34% in the third quarter of 2018 to reach 45% in the second quarter of 2020.

With the new state pension worth £179.60* per week, having to wait longer to claim significantly reduces the incomes of most people affected by this reform. Something to think about, and good reason to review your private pension provision, particularly if your retirement planning still revolves around age 65…

* The maximum state pension in 2021/22 is £179.60 per week

The value of your investment and income from it can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance.  

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