Millions affected as state pension age rises to 66
The rise in the state pension age will affect millions of people.
Anyone who was under the age of 57 on 6 April this year will now have to wait until they are 66 before they get their pension.
For younger people the situation is likely to get worse. The Government is considering increasing the pension age to 70 or even higher in future decades. If that does happen, it should at least give people time to plan ahead to ensure they can pay for their retirement.
But yesterday's move by the Coalition to bring forward the increase in state pension age by six years, will leave those approaching retirement no time to adjust their plans.
"Fast-tracking the state pension age rise will hit the poorest the hardest by shortening the retirements of those living in areas where life expectancy is low," warned Michelle Mitchell of the charity Age UK. "By moving the date forward, the Government has denied those affected time to plan properly for a delayed retirement."
The charity also said the freezing of the savings element of pension credit will cost the average claimant £100 per year. Tom McPhail, a pensions expert at Hargreaves Lansdown, said the move reinforces the need for savers not to rely on government payouts to see them through old age. "This illustrates again the importance for everyone who is a position to save for retirement of saving enough, starting at an early age to not be dependent on the Government for your retirement income," Mr McPhail said. In short, the Government has taken drastic action to cut the cost of supporting Britain's ageing population. Individuals should also be planning drastic action to ensure they can still achieve the retirement they want.
Delaying retirement by a year can be a sensible move for anyone saving into a pension. According to Standard Life, a 45-year-old man saving £200 a month and delaying his retirement age by a year could see his pension rise by almost 10 per cent.
Meanwhile the tax credit reforms hold some good and bad news for lower-income households. Those with children will be relieved at the above-inflation rise in the child element in 2011-12 and 2012-13. However, claimants without children will have to make do with the standard working tax credit which will be frozen for the next three years.