The Department for Work and Pensions (DWP) has rejected calls to lower the State Pension age in England to 60. Around 70,000 people signed a Common Petition calling for a reduction in the State Pension age. Now, the government has responded saying that this would be “neither affordable nor fair.”
Here is the lowdown.
What is the State Pension and when do I get it?
The UK State Pension is a regular payment from the government that most people claim when they reach a certain age in later life. Funding for the payment comes from your National Insurance contributions. The amount you receive consequently depends on your National Insurance record.
The earliest you can get your State Pension is when you reach State Pension age. That age is currently 66 for both men and women. Between 2026 to 2028, the pension age will rise to 67. It will then rise again to 68 at some point between 2037 and 2039.
Until 2010, the State Pension age was 65 for men and 60 for women. However, qualifying ages for everyone were streamlined by 2018.
The date you actually reach the pension age now depends on when you were born. You can use the government’s check your State Pension age tool to find out when you can start claiming State Pension.
Why lower the State Pension age?
The reasoning behind calls to lower the pension age was to allow older people to retire earlier. This would free up jobs for younger people who have been hard hit by the pandemic.
As reported by the BBC, campaigners say that the Covid-19 pandemic “has put a renewed focus on intergenerational fairness,” with a significant number of young people losing their jobs and struggling to find new employment.
They say that lowering the pension age could swing the balance in young people’s favour and “restore their future”.
Campaigners agree that this might cost the Treasury financially. However, they say that paying State Pension to beneficiaries earlier is more positive than having a lot of young people on benefits like Universal Credit.
What did the government say?
The DWP responded to calls for the State Pension age to be reduced by saying that it is “neither affordable nor fair to taxpayers and future generations”.
Furthermore, they said it would make the benefit unsustainable in the long term. The way that the government has maintained the cost and sustainability of the benefit is by increasing the age at which people can access it in line with life expectancy changes.
In justifying its decision, the DWP cited recent Office for National Statistics (ONS) data that shows the number of people over State Pension age compared to the working population is expected to increase because people are living longer, on average. They argue that this means lowering the age would make it unsustainable.
The DWP pointed out the fact that had State Pension age not increased for men and women, the total additional costs to taxpayers would have been around £25 billion for the period between 2010/11 and 2025/26, in 2018/19 prices.
The DWP also responded to concerns about employment problems for young people, especially after the effects of the pandemic. It said that the government has provided an “unprecedented amount of support via our plan for jobs to help those of all ages find work and get the skills they need to return to work”.
What are my options if I want to retire at or work less from 60?
Unfortunately, you can’t retire at 60 and claim State Pension.
However, if you have another pension, such as a workplace or personal pension, you might be able to draw from it starting from the age of 55 (or even earlier in exceptional circumstances). You can then use the cash to support yourself until you hit State Pension age and start receiving your State Pension.
Overall, if you intend to retire early, it is best to begin planning for it as soon as possible. Check out our article on how to retire early for guidance and tips.
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