Retirement Age & State Pensions
At what age is it possible to retire and receive my state pension?
Since the early years of the National Insurance scheme in the UK, the retirement age was 65 for men and 60 for women. This was also known as the statutory retirement age and many employers used it as the “default” age at which an employee could be forced to retire. There is no longer such a default retirement age.
- If you remain in employment, the age at which you retire is a matter between you and your employer
- If you have a workplace or occupational pension scheme the age at which those benefits become payable also vary from one scheme to another.
The state retirement age – the age at which you qualify for receipt of a state pension – is used by many as a general yardstick for determining when to retire.
Lengthening life expectation has made it increasingly difficult for the National Insurance scheme in the UK to remain financially viable. In response, the government has announced a number of changes to the 65 years for men and 60 years for women that previously held sway for so long.
As the Daily Mail’s This is Money pages explained in an article dated the 4th of January 2017, one of the first steps by government was to gradually bring the retirement age for women in line with that of men. These changes are being phased in until their completion in November 2018 – with a woman’s precise state pension age being determined by the month in which they were born.
After the retirement age for women has risen to 65 (in line with men) by November 2018, further changes are already set to be made to the retirement age for both men and women:
- between October 2018 and October 2020, state pension age is set to rise to 66 for both men and women;
- between 2026 and 2028 it will again rise to 67 years; and
- further changes in state retirement age may be made in response to changes in life expectancy.
At its very simplest, the 65 years of age for men and 60 years for women is no longer the automatic cut off point and end of anyone’s working life.
You can read more about the new Pension rules here (this will link to copy within Pensions section)
Living longer in Retirement
The statistics speak for themselves. We are all living that much longer.
According to the latest figures released by the Office of National Statistics (ONS) in Britain the life expectancy at birth is 79.1 years for men and 82.8 years. This is a considerable increase on the
figures at the beginning of the 20th century when life expectancy was a mere 45 for men and 49 for women.
More startling, perhaps, is the projection made in a recent paper by the Royal Geographical Society, entitled 21st Century Challenges, that one in every three children born in the year 2013 is expected to live until they are 100 years old or more.
As a result, we may be reaching – and in some cases, have already reached – a situation in which people spend a greater proportion of their lives in retirement than they do at work.
This sea of change in the work life balance clearly has far reaching implications, not least for our whole concept of retirement, how to prepare for it and how to live it.
Included in those implications are some fundamental questions you might want to address, such as:
- at what age is it possible to retire and receive my state pension (occupational pension schemes already have many different retirement ages);
- what is my income likely to be upon retirement;
- will I be able to retire at all – or have to postpone your preferred retirement date;
- what financial planning is necessary in order to prepare for my retirement;
- how am I and my relatives going to fund the costs of my eventual funeral; and
- what, if any, scope is left over pursuing favourite hobbies and pastimes – or simply living the life I have earned in retirement.
These are all questions that bear closer examination – so let’s see what financial help may be available from the state, in return for the National Insurance contributions you have been paying throughout your working life.
Disability Living Allowance
Although we may be living longer, the chances of a disabling medical condition remain present throughout many retirement years.
Limited assistance is available if you are disabled and these are designed to help towards meeting the additional living expenses you face because of your disability.
Previously, this has taken the form of Disability Living Allowance (DLA), but this is being phased out, to be replaced by a Personal Independence Payment (PIP), and it is this for which new claimants need to apply.
If you are already in receipt of DLA, and were born on or before the 8th of April 1948, payments will continue to be made for as long as you need them. If you were under 65 years of age on the 8th of April 2013, you will be reassessed for the new PIP when DLA is finally withdrawn in 2018. Personal Independence Payments, however, are not available for those aged over 65, who might instead qualify for an Attendance Allowance.
Disability Living Allowance (DLA) – rates
- DLA is calculated according to two components – the need for care and the degree to which your mobility is impaired. Both components are also graded according to higher and lower rates;
- currently care component payments range between £21.80 and £82.30 a week;
- the mobility allowance varies between £21.80 and £57.45 a week;
Personal Independence Payments (PIP) – rates
- PIPs, on the other hand, are only payable to those aged between 16 and 65 – so of little practical benefit to those who have retired;
- this is a non-means tested allowance for the over 65s who need a degree of support or care, when your ability to look after yourself is impaired by a mental or physical illness or disability;
- there are two bases for qualification, with payments currently of £55.10 a week if you need care during either the day or the night; and £82.30 a week if you need help and support during both the day and the night.
A comparison of the figures for the former Disability Living Allowance and Attendance Allowance reveals that the level of financial support available for those who need care at home during their retirement have been significantly decreased.
Housing Benefit is another of the publicly funded sources of help – for those of working age and for the retired – that is being phased out and replaced by Universal Credit.
Housing Benefit is intended purely to help people on low incomes to pay their rent. It is available only for tenants and not for those looking to pay a mortgage or other form of home loan.
Housing benefit is paid by your local council and the amount you get depends on a range of factors such as the amount of rent you pay, what income you have – including that from other benefits – and where you live.
A story in the Mirror newspaper on the 23rd of November explains some of the background to the introduction of Universal Credit, which is intended eventually to replace a whole catalogue of existing benefits – Employment and Support Allowance, Income Support, Jobseekers Allowance, Working and Child Tax Credits and Housing Benefit.
When it comes into nationwide effect, however, Universal Credit is not available to anyone over the state pension age. Instead, pensioners seeking financial help with the payment of rent or any other expenditure if their income is less than the current maximum state pension payment of £155.60 a week