The government has launched a review of the state pension age to see whether or not it’s being managed fairly for taxpayers and those looking forward to receiving their retirement income.
The first review was conducted in 2016, when changes were made based on new life expectancy data. The government has been ordered to conduct a regular review of the state pension age, and in accordance with the law, must publish these latest findings by May 7th 2023.
The state pension age is currently 66, and two further increases are set out in legislation. These gradual rises, one for those born on or after April 1960, which will raise it to 67 by 2021 then 68 between 2044-2046 based upon when they were born with a few exceptions A rise from 65 years old (statutory) to around 2030 seems inevitable.
According to a recent study, the following state pension age review should be carried out before any changes are put into legislation. The first comprehensive assessment on this topic was conducted in 2017. It revealed that while most people believe they can work until they’re 68 years old without issue or risk to their health, there may come a point where physical capabilities cannot sustain employment any longer. This would mean lower incomes and increased financial strain due to both factors accumulating over time.
The government needs to make sure that decisions on managing its cost are “robust, fair and transparent for taxpayers now and in the future.” As our population ages, there will be an increase in those who benefit from state pensions. The number is expected to grow significantly over time which requires a plan – one where costs can still2020 affordably support projected revenue without compromising at least some level
of serviceability or sustainability into these programs as well
The state pension system must ensure that as the population becomes older, it provides a foundation for retirement planning and financial security.
The review will consider the implications of recent life expectancy data, a balanced assessment on how much it costs for ageing populations and future state pension expenditures. It also finds labour market changes and people’s ability or opportunities to work over age 65 to make decisions about what kind of society we want our country to be moving forward with this important topic at hand.
The government is commissioning two independent reports to contribute evidence considered during this review. One report will be from an actuary and another on other factors that may influence investment returns in pensions.
For retirees’ benefits packages to remain sustainable over time, we must know what impacts them to make informed decisions about future plans. Contact The Finance Management Centre today to learn how this will affect you and how to plan for the future.