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Advisers say state pension age is ‘tip of the iceberg’

Advisers tell clients not to rely on state pension after Government ‘shifting goal posts’ in the past

Pensions-savings-retirement-piggy bank

Advisers have called the Government’s proposal to bring forward the increase in state pension age the “tip of the iceberg”, as they predict more changes in the future.

The Government proposed a new timetable yesterday for an increase to the state pension age from 67 to 68 between 2037 and 2039. This is earlier than the current legislation which sees a rise between 2044 and 2046.

The new timetable is in line with what was set out in John Cridland’s state pension review in March.

Combined Financial Strategies chartered financial planner Jonothan McColgan is surprised by the timing of the proposal.

He says: “I’m surprised the Government has the courage to do this. They can see the writing on the wall that retirement age was going to increase, and that retirement benefits in the future will be less because the triple lock will come under increasing threat. These things were to be expected but it is a bit of surprise it has happened now with such a weak Government.”

McColgan adds: “We need people to take more responsibility for their old age but we have also got a situation where the Government is encouraging people to spend to keep the economy going. Those are contradictory.”

Aspect 8 financial planner Claire Walsh predicts the next step could be the introduction of means testing for the state pension.

She says: “Earlier in the week, research said life expectancy is tapering off but we have still got this black hole deficit so it is inevitable the Government will be making changes with this.”

Informed Choice managing director Martin Bamford adds: “It is probably the tip of the iceberg when it comes to state pension changes because we are all living longer and it is becoming increasingly unaffordable to maintain the state pension age or the level of the state pension in the future.”

Advisers say their clients are unlikely to be impacted by the change.

Bamford says: “In the main the clients we work with tend to be closer to state pension age now so it will be less relevant to them. We encourage people not to rely on state pension as a source of income unless they are very close to receiving it because we have already seen the Government move the goalposts in the past.”

McColgan says most of his clients are over the age of 50 and are in a position where the state pension is a bonus, not a necessity. However, he says that is not the case for the majority.

He adds: “It will affect people who are unlikely to seek advice because they are the people who are purely reliant on the state pension for their retirement. That is where this is a tough decision.”

Cavendish Ware associate director Roy McLoughlin says: “While not ignoring the state pension, we are saying to people please do not rely on it. When we are doing projections on people’s pensions and what they will be worth you get a general reluctance that people will not be able to touch their pension for a perceived longer time than they will.

“Anybody that was relying on solely on the state pension is in for a big shock.”

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Govt brings forward increase in state pension age

The Government has decided to bring forward the increase in the state pension age to 68 by seven years. Adopting the recommendations of the Cridland review into state pension increases, the Government has confirmed that the state pension age will rise from 67 to 68 from 2037. Speaking in the House of Commons today, Work […]

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Ban Premium Bonds as they are subject to inflation risk and Govt. is advising people to gamble.

    Move the Ubiquitous age 75 to 77 in order to be inline with the increase in state pension access and the soon to be 55 moved up to 57 private pension access.

    Ban relief at source Company AE pension schemes for those earning less than £11,500.

    Make pension Tax relief a flat rate 30% of Gross = 42.85% of contributions as opposed to 66.66% for HRT payers and 81.81% for ART payers.

    Close ALL Govt. DB schemes, we taxpayers cannot afford them. DO NOT mess about with State Pension increases, if people have worked and contributed NIC for 50 years, they deserve the increases.

    If people decide to go abroad and spend their money in economies abroad then they do not deserve UK increases.

    Have a ‘Jobs Tax’ on those UK based companies that export jobs out of Europe. They should be helping to build up the economies of Eastern Europe so that the men do not have to leave their families to find work in Western Europe.

    And finally……reduce the number of MPs and Lords by half and that will save billions. No Scottish, Welsh or Irish MP’s should be allowed to vote on ‘things’ that affect England only.

  2. And if we ever get to a means-tested state pension, that will be the beginning of the end! People that have worked/paid NICs and taken responsibility for their own private pensions, will be the ones detrimented by this. Yet why should those that have chosen to spend their money on other things rather than a pension, be the only ones to benefit from others NICS!? Otherwise I want NIC relief!

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