Choose your retirement age – plan your pension age
The traditional compulsory retirement age of 65 will finally go forever in October 2011. The changes in the retirement age mean that an employer can no longer require employee to retire and take their pensions at 65, purely on the grounds of age. This will give workers the freedom to work into their late 60s and even 70s, in agreement with their employer.
These changes in the national retirement age also give workers the freedom to defer taking their personal pension or company pension, or to maximise the size of their pension fund by making several additional years of pension contributions, before they retire.
However, the rule changes have also shown that many workers now realise they have not saved enough for retirement, and will now find themselves working longer, not by choice but out of financial necessity. In fact, research by Barings Asset Management shows that 1 in 10 workers now believe they may never afford to voluntarily give up work, and some 42% of people who do believe they will retire eventually, cannot predict when that will be possible.
This is something of a ‘wake up call’ for younger workers, who will still have time to choose their retirement age and pension age, if they act now by consulting their pensions adviser about forward planning.
Principle First offers a quality pension advice service for these very clients now wishing to factor the new retirement age guidelines into the retirement planning.
Would you like to review your pension planning to reflect the new retirement age? Make an online pension advice enquiry here.
Until October 2011, the retirement age remains at 65, and employers continue to have the power to issue a forced retirement notice requiring employees aged 65 to terminate their employment with 6 months’ notice before their 65th birthday.
For its part, the Government hopes that many will now modify their retirement planning and extend their working lives, continuing to pay National Insurance contributions for several years longer than before.
The option to work beyond 65 is likely to be beneficial to those who wish to delay their pensions retirement age, as they do not wish to be reliant on the relatively modest income they may have from the basic state pension and their personal pension savings.
Increases planned for basic state pension age
There is currently much debate going on regarding increases to the basic state pension age, i.e. the minimum age at which you can claim the state pension funded by your National Insurance contributions paid during your working life.
In June 2010, a government spokesperson claimed that the pension age would increase by 1 year every 5 years from the current age of 65, until it reached 70 around the year 2035. This would have meant that those aged 45 in 2010 would be the first generation unable to access their basic state pension until 70.
However this plan has since been rethought and the pensions minister is now talking of a pensions retirement age for the basic state pension that will rise to 68 – although no specific timescale has been given.
Contact us now for latest advice on the retirement age and pension age. Make an online pension advice enquiry or ring freephone 0800 678 5929 now
