The state pension age is currently set at 66 years of age, but this is set to change before the end of the decade. Arguments have been made that th
The state pension age is currently set at 66 years of age, but this is set to change before the end of the decade. Arguments have been made that that state pension age should be reduced, but others believe it needs to increase even quicker.
Plans are in place to increase the state pension age to 67 in 2028, and this is not the only change on the horizon.
Another state pension age hike will take place no later than 2046, increasing it to 68.
This could have a big impact on when the current generation of British workers will be able to retire and claim their state pension entitlement.
There have been calls in recent months to put the plans for an increased state pension age on hold, partially driven by a fall in life expectancy during the COVID-19 era.
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Subsequent increases to 69 would also be needed by 2038 and 70 by 2042, according to the ILC.
The full new state pension is currently worth £179.60 a week, giving pensioners an income of £9,339.20 for the year.
On the other hand, the full basic state pension has a value of £137.60, adding up to £7,155.20 for a full 12 months.
However, the basic state pension is only for people who reached state pension age before April 6, 2016.
This means people who are impacted by the state pension age increase will get the new state pension instead.
The state pension increases every year under the terms of the triple lock policy, in an effort for it to keep up with the cost of living, meaning those who retire in the future should get more state pension than today’s pensioners.
Three different figures are used, which are the rate of inflation, average earnings growth and 2.5 percent. Whichever one is the highest dictates the state pension increase.
This would have ordinarily meant the state pension rose by more than eight percent this year, in line with average earnings growth, which would have been a record increase.
However, the Government decided to make a temporary change to the triple lock for the 2022/23 tax year, removing the earnings link and denying retirees a bumper income boost.
This was done because the Government believed the unusually high average earnings growth figure was a result of the COVID-19 pandemic, and they decided this level of increase would be an unfair burden on taxpayers.
The state pension will therefore increase by 3.1 percent instead, in line with inflation for the year to September 2021.
This will provide an extra £5.55 for people who get the full new state pension, taking it to £185.15 per week.