Increases to the state pension age starting tomorrow will leave many soon-to-be pensioners short of thousands of pounds, AJ Bell warns.
For the first time since the current pension system was introduced in 1948, men’s state pension age will begin to from 6 December. Women’s state pension age began steadily increasing from 60 in 2010.
The government announced in 2011 it would begin increasing men and women’s state pension age from 65 to 66 between 6 December 2018 and 6 October 2020.
The reform was designed to cut billions from the UK’s welfare bill.
By 2039 the state pension will rise to 68.
Changes will be introduced gradually but will lead to discrepancies. Someone born 65 years ago today, for example, will already be able to claim a state pension, whereas a another born 65 years ago tomorrow having to wait until March 2019 to claim the same benefit.
Pension provider and platform company AJ Bell says this will come at a cost for those who will have to wait longer to get their state pension.
AJ Bell senior analyst Tom Selby (pictured) 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.”