The State Pension age in the UK is set to rise from 66 to 67, beginning in 2026, with the full implementation expected by 2028. This change, outlined in the Pensions Act 2014, is designed to accommodate shifting life expectancies and demographic trends. Furthermore, the age is slated to increase from 67 to 68 between 2044 and 2046.
These adjustments aim to reflect the growing life expectancy, ensuring the pension system remains sustainable. As noted by DevonLive, the government has planned these changes with careful consideration, though further reviews may be conducted as part of ongoing pension reforms in the coming years.
Transitioning to 67
The Pensions Act 2014 fast-tracked the increase in the State Pension age from 66 to 67 by eight years. The UK Government has also altered the phasing of this change, meaning that people born between March 6, 1961, and April 5, 1977 will become eligible for their State Pension when they turn 67, rather than on a fixed date.
For anyone affected by these changes, the Department for Work and Pensions (DWP) will send a letter well ahead of the planned transition to ensure no one is caught by surprise. This transition is part of the ongoing effort to adjust the State Pension age in line with life expectancy and demographic shifts in the UK.
Future Plans for Pension Age Adjustments
Looking ahead, the Pensions Act 2007 dictates that the State Pension age for both men and women will rise from 67 to 68 between 2044 and 2046. The government is required to review the State Pension age every five years, taking into account life expectancy and other factors.
A significant review of the pension age increase to 68 is expected before 2030. The review will help determine if any changes need to be made, although any proposed changes will need to go through Parliament before becoming law. The review was originally scheduled to occur after the 2024 general election but is now due to be completed by 2026.
Checking Your State Pension Age
Anyone, regardless of age, can use the online tool on GOV.UK to check when they will reach State Pension age. Knowing this can be crucial in planning for retirement. The tool can also inform users about their eligibility for Pension Credit, free bus travel, and more. The State Pension age checker has already been used by 3.7 million people since its launch.
How to Increase Your State Pension Payments
The government has launched a new digital service to help people maximise their State Pension by making voluntary National Insurance (NI) contributions. Over 10,000 payments totaling £12.5 million have already been made to boost State Pensions through this new service launched by HM Revenue and Customs (HMRC).
However, there’s a deadline approaching for filling in gaps in National Insurance records dating back to 2006. People have until April 5, 2025, to make these contributions to improve their pension.
Alice Haine’s Insight on Filling Gaps
Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, advises that people need at least 10 qualifying years of National Insurance contributions to qualify for any State Pension. To receive the full new State Pension, a total of 35 qualifying years are required. However, these years do not need to be consecutive.
“Plugging gaps can be quite an expensive process, so it is important to assess whether you actually need to buy back any missing years. This will depend on how many more years you plan to work, and whether you are eligible for NI tax credits, which fill the gaps, such as those who have been sick, were unemployed, or took time out to raise a family or care for elderly relations,” Said Haine.
People can fill gaps in their National Insurance records through the government’s new NI payment services. Haine emphasises that it’s essential to assess whether it’s worth paying to fill gaps, as this process can be costly.
Those eligible for NI credits, such as people who were unemployed, sick, or took time off to care for family members, might not need to make voluntary contributions and could instead rely on credits.
Taking Action Before the Deadline
Individuals looking to fill gaps in their National Insurance record now have streamlined tools at their disposal through HMRC’s digital services.
“People simply need to log into their personal tax account or the HMRC app to not only view any payment gaps but also check if they can plug those gaps directly through the government’s digital channels,” Haine continued.
“A “short survey assesses the person’s suitability to pay online, with those eligible to pay directly given a series of options to plug any gaps depending on when someone wants to stop working. Calculating whether to top up can be confusing though and ultimately there is no point paying for more years than you need because you won’t get that money back.”
Those who think they may need to top up their National Insurance record should begin the process soon. The deadline for voluntary contributions is fast approaching, and the government has extended it a couple of times in the past, making it likely that they will stick to the April 5, 2025 cut-off date this time.
Ms Haine added,
“People who might need to top up include those that took a career break as well as low earners or expatriates living and working abroad. Remember, this deadline has been extended a couple of times in the past, which makes it more likely the government will stick to the April cut-off point this time around. For this reason, those that think they might need to take action should start the process now.”
