The government is reportedly looking to extend the retirement age to 68 by 2035 later this year.
While you can retire at any time if you have an individual pension or retirement plan in place, anyone who wants to State Pension will have to wait till you reach the age of retirement.
It means millions of people will have to work longer hours if Prime Minister Rishi Sunak and Chancellor Jeremy Hunt decide to go ahead with the spring budget in March.
Currently, the retirement age is 66, but will still rise to 67 in 2028.
It was expected to rise again to 68 in 2046, but Sunak and Hunt may bring this forward meaning it is likely to come into action around 2035, according to Sun.
This means that everyone aged 54 and under (born after April 1971) will have to work longer until they become entitled to their state pension.
What is State Pension?
The state pension comes from the government.
It is calculated based on a person’s National Insurance contributions, which worked under the pre-2016 system, which gave workers a “starting amount”.
This is the highest option between the amount you would have received under the old State Pension rules or the amount you would have received if you had a new State Pension at the start of your working life.
At the moment, the maximum you can get on a new-style pension is £185.15 a week or £9,627.
If the amount you receive is less than this, you can add more eligible years to your National Insurance record after April 2016.
The weekly allowance will also increase in line with inflation by 10.1% in April to £203.85.
Why will the government change the state pension age?
Pensions consultancy LCP told The Sun that raising the pension age by just a year ahead of plan could raise more than £9bn for the Treasury, saving £8bn in pension payments and additional taxes on extra income £1.3 billion could be saved.
This means it will help pump billions back into the economy as the country is still on the brink of recession.
An aging population and falling birth rates mean that the pension age has already been rising slowly over the years.
However, a government spokesman told The Sun that “no decision has been made yet”, but a review of the state pension age will be published early this year.
Will this policy be good?
Work and Pensions Secretary Mel Stride has reportedly already pushed back on the increase, calling for the change to be pushed back to 2042.
Apparently, Stride has said that the predicted increase in life expectancy has not appeared in the wake of the pandemic.
There is also a potential concern that raising it to 68 could mean more people could die without receiving their pension, especially in areas where life expectancy is already particularly low.
The Tory party in particular could face a backlash as it has a large number of supporters in the older age bracket. It faced criticism in 2016 when it equalized the retirement age for men and women.
In France this week, people took to the streets after it was recently announced that the retirement age would rise from 62 to 64 – although French President Emmanuel Macron said he was not deterred by the reforms.
But there have been calls for even tighter new restrictions on the state pension age.
The think tank of former Tory leader Ian Duncan-Smith is called Social Justice Centerhas suggested changing the state pension age to 70 by 2028 and 75 by 2035.
It claimed: “The aging population and rising old age dependency ratio are raising serious concerns about the long-term financial stability in the UK.
“If we expect (state pensions) to continue in the future alongside the full functioning of public services … the UK’s fiscal balance must be set right.”
(tags to translate) Rishi Sunak