The plan to bring forward the increase in the state pension age to 68 has reportedly be “delayed” by ministers. However, as the hike to 67 is set to go ahead as planned, over 50s still face a longer wait for their payments from the Department for Work and Pensions (DWP).
Currently, the state pension age is 66 – the age at which people are recognised as pensioners by the Government. It had been expected that the age would be increased to 68 from 2044, but a recent report showed that ministers had considered bringing this forward to between 2037 and 2039.
But the proposal to bring the increase forward has now been abandoned, the Financial Times reports. It is believed to be due to fears of a backlash from voters in their 50s, as well as falling life expectancy figures. It was expected that confirmation of the state pension age rise would come by May of this year, but that is now unlikely to happen until spring 2024.
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Although the rise to 68 will not be brought forward, the hike from 66 to 67 is still due to take place on time, meaning over 50s will have to wait longer for their state pension payments. It comes as the Government makes a conscious effort to persuade people in this age demographic to stay in work or return to it.
In what Chancellor Jeremy Hunt branded his 'Back to Work Budget', he also announced that the lifetime allowance on pension savings would be abolished, meaning those with large amounts of money in their pension schemes would not have to pay extra taxes if they save beyond a certain threshold.
Mr Hunt also announced an increase to the Money Purchase Annual Allowance (MPAA) to further encourage over 50s to remain in the workplace. This means people are able to put more money into their pension plans each year without paying extra taxes.
It was thought that bringing forward the state pension age would act as a further incentive as part of the plan to get people to stay in work. But it appears ministers may have decided that this policy would be too unpopular.
Dean Butler, managing director for customer retail at Standard Life, explained how reports of a hike in the state pension age had caused anxiety. He said: “The news that further increases to state pension age have been delayed will be met with a sigh of relief from those who would have been affected.
“When rumours of a planned increase were first reported in January it prompted thousands of people to go online with 110,000 searches for ‘retirement age’ recorded. This was an 82 percent rise on the same period last year, highlighting just how significant the issue is for many people.”
The retirement expert outlined the impact the policy would have had on many people. He added: “Those currently in their early fifties were the first that could have been impacted by the changes and these would have been particularly challenging for a number of groups.
“Those planning to start accessing their personal savings before for state pension age would have had to consider whether they would have stretched far enough to bridge the gap, while others would have faced an extended period in the workforce.”
Those already receiving the state pension will see a rise in their payments in the coming weeks, with a rise of 10.1% coming in April. The increase is due to the reinstatement of the triple lock, which keeps the state pension in line with whatever is highest out of inflation, average earnings growth and 2.5%.
Someone receiving the full new state pension will see their annual payments go above £10,000 as a result.
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