New State Pension age changes set to delay retirement payments for millions of people
The State Pension age is set to rise from 66 to 67 between 2026 and 2028 with a further rise planned to 68.
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The State Pension age is set to start rising from 66 to 67 next year, with the increase due to be completed for all men and women across the UK by 2028. The planned change to the official age of retirement has been in legislation since 2014 with a further rise from 67 to 68 set to be implemented between 2044 and 2046.
The State Pension age review, published in 2023, considered the impact of bringing the official age of retirement forward to 2041-2043, which had been a hot topic during the Rishi Sunak administration due to more people living longer, which essentially puts pressure on the UK Government to continue supporting the State Pension - in its current format.
The then Conservative government had planned to review the State Pension age rising to 68 within two years of the general election, but those plans were effectively kicked into the long grass when Sir Keir Starmer and the Labour party came into power on July 4, 2024.
But it could be something the UK Government looks at, and soon, as it must follow the principle of giving people 10 years notice of any changes to the State Pension age - or potentially end up with another situation which has affected an estimated 3.6 million women born in the 1950s.
Phoenix Insights has warned that around three million people would see a delay to their retirement plans if the State Pension age increase to 68 is brought forward.
The latest figures from the Department for Work and Pensions (DWP) show there are now 13 million people claiming the State Pension, including over 1.1m in Scotland. Some 34 per cent are on the New State Pension (post-April 2016) while 66 per cent are receiving the Basic (or Old) State Pension (pre-April 2016).
People on the full New State Pension receive £230.25 per week and as the payment is typically made every four weeks this amounts to £921. Annual payments will be worth £11,973 over the 2025/26 financial year.
However, it's important to be aware that not all of the 4.1m people on the New State Pension receive the full amount as it is linked to National Insurance Contributions.
People need to pay at least 10 years' worth of National Insurance Contributions (NICs) to be entitled to any State Pension and around 35 years for the full rate, which can be more if someone has been 'contracted out'.
Someone on the full Basic State Pension receives weekly payments of £176.45, or £705.80 every four-week payment period. Annual payments will be worth £9,175.40 over the 2025/26 financial year.
Patrick Thomson, Head of Research Analysis and Policy at Phoenix Insights, said: 'The State Pension remains at a critical juncture with questions remaining over its long-term affordability and the future of the Triple Lock. Projections suggests there will be five million more State Pensioners in the UK by 2070 compared to just one million more people of working-age.'
Four key findings about the State Pension
Phoenix Insights found that:
Around a fifth (18%) of adults say they could live on the state pension alone in retirement
A third (35%) of the pre-State Pension age group (60-65yrs) have zero private pension saving
45% of adults expect to work beyond their State Pension age to plug gaps in savings
3 million people would see a delay in State Pension payments if the retirement age increase to 68 is brought forward to 2041-2043
Mr Thomson continued: 'Accelerating the State Pension age could mitigate some of the cost challenge, but recent life expectancy projections are less optimistic making policy change potentially more difficult. Bringing forward the State Pension age increase to age 68 to the early 2040s would impact nearly three million people and not everyone will be able to work to a later State Pension age.
'We are expecting another State Pension age review in this parliament which should offer more clarity on the timetable of the future increase to age 68.'
He added: 'It's important that any future change to the State Pension is combined with policy interventions to support greater retirement adequacy, including enabling people to remain in work later in life and boosting pension saving through auto-enrolment.'
Future State Pension increases
The Labour Government has pledged to honour the Triple Lock or the duration of its term and the latest predictions show the following projected annual increases:
2025/26 - 4.1% (the forecast was 4%)
2026/27 - 2.5%
2027/28 - 2.5%
2028/29 - 2.5%
2029/30 - 2.5%
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