SPA rise set to leave many short of thousands

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havenifa


Posted on: 12th Dec 2018

From Friday 6th December, increases to the state pension age will leave those who are close to receiving theirs will be left short of thousands of pounds. This is according to warnings by AJ Bell. For the first time since the pension system was introduced in 1948, the age at which men receive their state pension will change.

History of SPA Rise

We have already seen the women’s state pension rise. Starting in 2010, the age at which women can receive their state pension has slowly increased over the years. In 2011, the government announced that it would begin to increase the state pension age from 65 to 66. This starts from 6th December and should be complete by 6th October 2020.

This reform was designed to cut the UK’s welfare bill. By 2039, the state pension is expected to rise to 68. These changes will be introduced gradually. However, they will lead to discrepancies. Say someone was born 65 years ago on the 5th. They will already be able to claim their state pension. However, if another individual was born a day later, they will have to wait until March 2019 to receive the same benefit.

The Downside

According to pension provider and platform company, AJ Bell, this will come with a cost for those who will have to wait longer before they can receive their state pension. Senior analyst at AJ Bell, Tom Selby, says “A state pension age increase probably isn’t what most people asked for in their Christmas stocking, but that will be the reality for many people who are about to turn 65.

“The short-term impact on people’s finances could be significant. At the lower end, a three-month rise in the state pension age could cost someone over £2,000 in retirement income. Those who have to wait a full year longer could miss out on over £8,000 in state pension.”

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