With the life expectancy of Britons expected to keep rising over the long term, a think tank has suggested the state pension age will also have to rise higher than planned for the system to remain sustainable.
The International Longevity Centre’s (ILC) Healthy Ageing and Prevention Index says the age at which people can claim their state pension should be raised to 70 or 71 as early as 2040. This, it says, is partly down to a higher rate of workers dropping out of the workforce before they reach state pension age due to ill health.
With these people no longer working and paying income tax, the tax base to fund everyone else's pensions is getting smaller. The think tank says that while a recent stalling in life expectancy during the austerity years and COVID-19 eased some of this pressure, the long-term pattern could still require the pension age to be raised to 68 or 69 after 2027.
One solution is to enable people to work longer, but this is easier said than done, with research showing that by 70, only 50% of adults are disability-free and able to work. Here, Yahoo News explains the current rules on state pensions and the benefits you can expect to receive.
What is the current state pension age?
The current state pension age is 66 for both men and women, for those reaching the milestone now.
It is expected to increase to 67 between May 2026 and March 2028, and then again to 68 from 2044, but as mentioned, some experts believe this still won't be enough to keep the system afloat.
The state pension age used to be 60 for women, and 65 for men, but it was equalised at 66 for both in October 2020.
You can use this tool on the government's website to check when you can claim your state pension, how much you can get and how to increase it, if you can.
How much people can expect to get?
The full new State Pension is £203.85 per week, although the amount you receive may vary depending on your National Insurance record.
If you reached state pension age before 6 April 2016, you’ll get a different amount under the basic state pension rules.
You could potentially get more money if you qualify for additional state pension. This applies to men born before 6 April 1951 and women born before 6 April 1953. This excludes those on the new state pension, although they may still be able to inherit the additional rate from their partner.
Those who are eligible for the additional pension will receive it automatically, unless they opt out, and it will be paid alongside their basic pension.
It is also possible to increase the amount you receive by deferring your pension. As people have to apply for their state pensions in the first instance, they don't have to do anything if they want to defer.
State pensions will increase by the equivalent of 1% for every nine weeks a person defers, which works out to just under 5.8% for every 52 weeks. The extra amount is paid with your regular state pension payment.
Watch: Stark gaps in pension literacy, with state school educated Brits left behind, research shows
What other benefits can people at pension age receive?
There are a number of additional benefits available not just for people at state pension age, but for over 60s also.
Over 60s in London can apply for a Freedom Pass, allowing free travel on buses, the Tube and other public transport, while in the rest of England those at pension age can apply for an older person's bus pass.
Older person's bus passes are available to over 60s in Wales, Scotland and Northern Ireland. Those aged over 60 can also apply for a National Rail Senior Railcard, which gets them a third off train tickets.
Those over the state pension age on low incomes can apply for pension credit, which is extra money to help people with the cost of living.
— Department for Work and Pensions (@DWPgovuk) February 3, 2024
Free TV licences are also available to over-75s who receive pension credit, while those in a residential care home or sheltered accommodation are eligible for a discount.
If you receive state pension, you should be automatically be paid a winter fuel payment to help with energy costs. This annual one-off payment could range from £100 to £300 depending on your age, who you live with and any other benefits you already receive.
Eligible households were granted an extra £300 top-up for 2023/24 to help with the energy crisis and inflationary pressures.
What about private pensions?
Private pensions, which people tend to pay into along with their employer as they work, offer a bit more flexibility.
Once you turn 55, you’ll be able to withdraw up to 25% of your workplace or personal pensions tax-free. For the remaining 75%, you’ll be charged at your normal income tax rate, according to PensionBee.
It is possible to access your personal pension before 55, but there are some major drawbacks, including a tax charge of up to 55% on the amount you request to withdraw. One exemption to this is if you are seriously ill, can no longer work and have a terminal illness with less than a year to live.
Another exemption is for those with a protected retirement age, which generally applies to careers where early retirement is common, such as professional sports or military service.
The normal minimum age for withdrawal is expected to increase to 57 from 2028.