For many of us, if asked when our State Pension will be payable we will reply that it’s at age 65 for men and age 60 for women. It’s the number that we grew up with in our heads and the retirement age which most employer pension schemes targeted as well. But since 2010, the State Pension Age (SPA) has been undergoing radical changes so that by 2018 the SPA for men and women was equalised at 65 and is now age 66, with further increases to age 67 planned and age 68 being considered.
With a full state pension for a married couple of almost £18,200 each year, this pension is a cornerstone of financial planning in retirement – if it starts later than you thought, you need to plan for this now.
Do you know your State Pension Age?
Having a clear picture of when and how much State Pension you will receive is key to retirement planning and by looking ahead you can take control.
Check your State Pension age on the GOV.UK website at www.gov.uk/state-pension-age
You can get a State Pension forecast online at www.yourpension.gov.uk. You will need to register on the Government Gateway to obtain a user ID.
If you have already registered on the Government Gateway, for example to submit a tax return, you can use your existing user ID details to log in.
If you do not have Government Gateway, click on the ‘Create an account’ and follow the instructions. You will need either a valid UK passport, a P60 for the latest tax year or payslips for the last 2-3 months.
Your State Pension forecast will show you what you might receive and when these payments may start, but values or dates are subject to change.
Adapting to change
The Institute for Fiscal Studies (IFS) has examined the impact of the SPA changes to date. For example, the employment rate for 65-year-old women jumped from 21% in the third quarter of 2018 to 35% in the second quarter of 2020. For 65-year-old men, there was also a sharp rise over the same period, from 34% in the third quarter of 2018 to reach 45% in the second quarter of 2020.
As the IFS says, “Having to wait longer to claim a new state pension, significantly reduces the incomes of most people affected by this reform.”
If you are planning to retire before your State Pension Age, will you be able to provide the income you need and are your pensions and savings invested in the funds which match your attitude to risk and meet your objectives?
Helping you retire how you want
Your income in retirement may come from many different sources, but you need to plan ahead.
• Can you increase the value of your pension?
• Do you know where all of your previous employer and personal pensions are? – even if you were part of a non-contributory scheme, you are likely to have benefits owed to you.
• Since April 2011, employers have not been able to insist that an employee retires but many company pension schemes have an assumed retirement age of 65 – does your pension scheme retirement date match your plans?
We use cashflow modelling to build a picture of your current and future financial position. Our model will also reflect any specific needs for additional income or lump sums that you may need during retirement, such as special planned events or holidays. Our modelling is particularly helpful in highlighting any potential shortfall or where income may run out during your lifetime as well as identifying if you have disposable income that can be gifted to reduce your inheritance tax liability.
Carrying out this assessment as early as possible means that you can take the required action and control how and when you can retire.
Contact your Origen adviser or call our Client Liaison team if you want to get your retirement planning into shape for 2021.
The value of your investment and income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.