In the past, the state pension age was 60 for women and 65 for men, but increases announced under the Pensions Act 1995 and then accelerated under the Pensions Act 2011 meant the state pension age for women increased between April 2016 and November 2018 – at which point it reached 65.
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Now, the state pension age is rising for both men and women.
It’s set to reach 66 by October 2020, ahead of further increases to 67 and then another planned rise to 68.
The timetable of the latter changes is based on current law, with the Pensions Act 2014 providing for a regular review of the state pension age, at least once every five years.
Market volatility and the economic impact of the coronavirus crisis has no doubt been a concern for many retirees-to-be.
Half (51 percent) of the UK’s pension investors say their savings won’t meet their needs in retirement, according to new research from Fidelity International.
Worryingly, this “pension blackhole” looks set to widen further, with 48 percent experiencing a drop in the value of their retirement savings following the impact of COVID-19.
Maike Currie, investment director, Workplace Investing, Fidelity International, said: “The COVID-19 market falls will be remembered for their speed and brutality, with extreme market volatility, often over consecutive days.
“While the market has recovered some of these losses, for many the impact will be far longer lasting, with half of investors reporting a ‘pensions blackhole’ impacting their retirement plans.
“Pension pots that have taken decades to build may have suffered sharp losses, leaving those near retirement assessing their options for bridging the gap between their expectations and their actual income.”
Ms Currie added: “For those nearing retirement, working for longer may not be an option they either want or can pursue, depending on their circumstances.
“Similarly, they’re likely to want to hold onto their desired standard of living as much as possible.
“Drawdown allows you to remain invested for as long as possible – benefiting from potential market recovery – while also offering you access to flexible income.
“However, always make sure you have sufficient cash or a guaranteed income – this could be your state pension, an annuity or defined benefit pot – to cover the essentials. As COVID-19 has taught us all, you really never know what is waiting around the corner.”
While relying on savings and state pension may be an option some looking to delay turning to their private pension savings may be able to consider, it won’t be for others – including those who are affected by state pension age changes and without savings.
This is something which Michelle Gribbin, chief investment officer at Profile Pensions, has addressed.
Speaking exclusively to Express.co.uk, she said: “Changes to the state pension age is an ongoing issue that has been a concern for some time now, so it should be no surprise to consumers at what age they will receive their pensions.
“However, recent changes in employment stability may impact on a consumer’s retirement plans.
“While early indications have shown a relatively quick recovery of the fall in investment values, the impact of the virus on the economy, as we return to some kind of normality, could lead to sustained market volatility for some time.
“As a result, market instability could lead some people who were wishing to retire in the near future to choose to continue to work to protect their pensions savings and therefore future income.
“However, following the impact of the Covid-19 crisis, many are likely to lose their jobs, often with minimal redundancy pay.
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“This, coupled with many consumers’ lack of savings, may lead to concern around income and could force some to consider withdrawing from their pensions earlier than planned which will impact future income.
“In addition, with state pensions now being paid later, people may need to utilise a proportion of their pension fund to supplement their income in the meantime. The longer-term impact of this will leave people with less monies in their fund to support their income later in their retirement.
“When markets are volatile it is more important than ever to ensure your pension is invested in the right place and to be well-informed about your retirement choices. Seeking impartial advice is a great way to understand your options and plan ahead for the future.”
Laura Laidlaw, Head of Customer Communications at Standard Life, also spoke to Express.co.uk about the COVID-19 pandemic, and the changes to the state pension age.
“Earlier this year savers might have seen their pension pot values dip as the coronavirus pandemic unfolded, but thankfully we are already starting to see the markets gradually bounce back,” she said of the crisis.
“Understandably this has been a cause of concern for those already in retirement and many have had to rely on a mix of their state pension and cash savings where possible to help them minimise taking from their personal pension pot during this period of turbulence.
“However, hopefully most will already be seeing their pension pot start to recover and won’t be forced to rely on other reserves for much longer.”
Speaking to Express.co.uk about the changes to the state pension age, she continued: “The state pension age rising to 66 over the coming months may cause some people to delay retirement slightly, particularly so in the current climate when accessing investments may be less favourable.
“But under normal circumstances most people will also have a private or workplace pension that they can currently access from the age of 55, so the rise in state pension age doesn’t have to impact you if you plan ahead.
“The reality is, your state pension alone isn’t going to give you the lifestyle most hope for in retirement.
“The basic state pension is less than a minimum wage salary at around £8,500 a year for most people.
“That’s why starting to save from an early age and contributing throughout your working life into a pension will put you in control and give you a lot more choices once you do reach retirement.”
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