State pension cut or more taxation may be among options to maintain state pension age | Personal Finance | Finance

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Once someone reaches the state pension age of 66, they are entitled to regular payments to help in their retirement. Under current legislation, this age threshold is set to be raised to 67 years of age by 2028. However, experts are warning people’s working lives could “stretch further” in front of them if they end up waiting even longer for their state pension.

New reports emerged recently, suggesting the Government is looking at bringing forward the age at which someone gets their retirement payments.

Specifically, the time period when the state pension age is increased to 68 could come earlier than expected.

Jon Greer, the head of retirement policy at Quilter, shared his thoughts on the rumoured change in Government plans.

He explained: “Proposed state pension age increases are always a bitter pill for the electorate to swallow as people see their working lives stretch further in front of them.

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“However, the Government did signal in its 2017 review that it would follow a recommendation to accelerate the increase to 68 into the 2030s, so these rumours are arguably not a change in stance.”

The pension expert highlighted that to maintain the current state pension age the Government would have to consider increasing taxation or reducing the amount of the state pension.

While neither option will be popular with the public, they come at a time when average life expectancy has stalled.

According to Mr Greer, there is a discrepancy between regions when it comes to life expectancy which means those who make National Insurance contributions throughout their life may not get the full benefit of the state pension.

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Mr Greer added: “Adjusting the state pension age based on the life expectancy of individual regions would be done with the intention of helping those who need it most.

“But it would be better than those in need received tailored support based on their personal circumstances via the benefits framework that a region-based state pension age would not be capable of doing so.

“Ultimately, people need to take responsibility for their own retirement and plan ahead, and taking professional advice or financial guidance earlier in life is a sensible step.

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If this were to happen, Britons will have to wait even longer for financial support they would otherwise have been entitled to.

Potential increases to the state pension age are based on the UK’s life expectancy data and are reviewed regularly.

Despite age hikes locked in, Government data suggests improvements in average life expectancy have reversed in recent years.

Taking this into account, the decision to bring forward the state pension age timeline would be considered even more controversial.



Author: Dhanraj7978

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