The state pension age could change with a review set to be published in early 2023, the chancellor confirmed.
Discussing the upcoming financial changes for people living in the UK, Jeremy Hunt said today (November 17) that the national Living Wage will increase. This means that the amount you get paid per hour will go from £9.50 for over-23s to £10.42 from April next year.
In addition to the change in hourly pay rates, Hunt also announced that certain means-tested benefits and pensions will rise in line with inflation rates, also set to come into force next year.
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He added that he will increase working age and disability benefits in line with inflation, with a rise of 10.1 per cent costing £11 billion.
The review into the change, announced in December 2021, comes as The Pensions Act 2014 means rules about pensionable age must be reviewed every six years to help to ensure the costs of increasing longevity are shared fairly between the generations. It also helps to provide greater clarity around how the state pension age will change in the future.
Due to the six year rule, this means it must be published by May 7, 2023.
Talking about the change, Money Saving Expert have said that the increase of state pension have been "based on the so-called 'triple lock' commitment, which guarantees that payments rise in line with the larger of either September's Consumer Prices Index (CPI) measure of inflation, average wage growth, or 2.5 per cent."
They explain: "This financial year, the triple lock was suspended due to a spike in average earnings growth caused by workers coming off furlough and pandemic-related restrictions easing, with the increase instead based on the higher of 2.5 per cent or CPI inflation - known as the 'double lock'.
"Today, the Government announced the return of the triple lock for both the new and basic state pensions, which means they'll rise by 10.1 per cent."
- If you reached state pension age before 2016, how much you’ll receive will rise by £14.33 a week from £141.85 a week to £156.18 a week.
- If you reached state pension age after 2016, how much you’ll receive will rise by £18.70 a week from £185.15 to £203.85 a week.
Commenting on the announcement, MoneySavingExpert.com founder, Martin Lewis, said in a tweet: "I am very pleased that both benefits and the state pension are being increased by the 10.1% September inflation rate. It only happens from next April, and it will still be hard for many, but if it was less than this it would've been devastating."
The Department for Work and Pensions (DWP) will also consider whether it should bring forward the rise in the age at which people become eligible for the state pension to 2037-39.
As previously reported by Glasgow Live, the state pension age is currently 66 however as estimated by the Government, increasing the pension age to 68 between 2037-39 would save £74 billion by 2045-46 compared to the current State Pension age timetable.
At present, the latest Office for National Statistics (ONS) projections show the number of people over state pension age in the UK is expected to grow by a third to 16.9 million in 2042.
All of this has huge implications for public finances. Two increases to the state pension age are currently set out in legislation:
- A gradual rise to 67 for those born on or after April 5, 1960
- A gradual rise to 68 between 2044 and 2046 for those born on or after April 5, 1977
The DWP said: “As the number of people over State Pension age increases, due to a growing population and people on average living longer, the government needs to make sure that decisions on how to manage its costs are robust, fair and transparent for taxpayers now and in the future. It must also ensure that as the population becomes older, the State Pension continues to provide the foundation for retirement planning and financial security.”
The Government has provided an online tool which gives an exact date for state pension qualification, just by entering your gender and date of birth. You can do so by visiting the Gov.uk website.
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