UK state pension age controversy ‘on the horizon’ as details of review loom | Personal Finance | Finance

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News that French Prime Minister Elisabeth Borne has set out controversial plans to increase the state pension age by two years to 64 by 2030 for people in France won’t be welcomed by many. Meanwhile, the review into whether the UK state pension age will increase from the current age of 66 for both men and women to 67, and eventually 68 is due soon which is expected to cause controversy on British shores.

News that state pension age will increase in France is likely to be unpopular with French voters and a decision on the UK state pension age is also expected soon.

All countries are experiencing a growing older population and a shrinking younger generation to support them leading to questions about the current age people can officially retire and claim the state pension.

Currently, the UK state pension age is 66, with two further increases to 67 and 68 are set out in legislation. A gradual rise to 68 is planned between 2044 and 2046.

However, the current review is considering whether the increase to age 68 should be brought forward to 2037.

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Tom Selby, head of retirement policy at AJ Bell, said: “No country has experienced quite as much controversy over state pension reform as France, with the Government previously reluctant to push through change for fear of sparking mass protests.

“Indeed, pensions were part of the reason we saw the angry ‘Gilet Jaunes’ demonstrations in 2018 and 2019.

“In the face of this, increases to the state pension age are ultimately inevitable. While a two-year rise in the state pension age will undoubtedly be unpopular among French voters, it is hard to imagine this relatively moderate increase will be the end of the story.

“State pension age controversy is on the horizon in the UK too, with a review into the state pension age set to be published in the coming months. The review is expected to determine when future retirees can expect to receive their state pension in the UK.”

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While the state pension age of women has risen by six years – mainly to catch up with men’s state pension age – for men it has risen by just one year.

Mr Selby said things will certainly be very different for the younger generation when they come to retire.

He said: “In reality, younger savers need to prepare for a world where the state provides less of their retirement income than it has done historically. Indeed, it would not be surprising if those in their 20s and 30s today have to wait until their 70th birthday or even beyond to receive the state pension.

“Prime Minister Rishi Sunak and his Chancellor Jeremy Hunt risk being caught between the Devil and the deep blue sea when it comes to state pension age increases. A dramatic acceleration of existing plans would risk electoral oblivion, while pushing back planned rises could cost the Exchequer tens of billions of pounds.”

Meanwhile, the cost of living crisis is leaving pensioners in Britain with just £28 a week left over after paying bills, a shocking new report has revealed.

UK pensioners have just £28 a week left over after paying household expenses according to The Pension Breakeven Index, compiled by pension advisors at Almond Financial.

Experts looked at general living expenses such as food shopping, the price of a meal at a restaurant and energy bills to discover an estimated cost of living per month, excluding rent.

Principal financial adviser at Almond Financial, Sam Robinson, said: “The UK has a system that is just above the breakeven point which means at present, there isn’t much room to manoeuvre for those battling the cost of living crisis.”

Almond Financial suggests five ways Britons can maximise retirement benefits:

  1. “Use pay rises to increase pension contributions and pay more into pension when loans and other commitments end

  2. “Maximise employer contributions

  3. “Ensure your investment approach is efficient and suitable to your financial situation

  4. “Maximise tax relief available

  5. “Avoid taking large lump sums of money from the pension when there isn’t a need – Taking the first 25 percent of your pension will be tax-free cash although any future withdrawals will be taxable.”

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