Workers born between 6 April 1970 and 5 April 1978 will have to remain in employment for an extra year after the government announced it will increase the state pension age to 68.
The decision means an estimated 5.8 million workers – or 1 in 7 – will have to work an additional year before they qualify for the state pension.
The proposal follows recommendations made by John Cridland CBE in March 2017 – Cridland’s review highlighted that by 2036/37, annual spending on the state pension would have increased by 1% of GPD on 2016/17.
To translate this into figures, this would equate to around £20 billion or a tax rise of £725 per household.
David Gauke, secretary of state for work and pensions, said:
“As life expectancy continues to rise and the number of people in receipt of state pension increases, we need to ensure we have a fair and sustainable system that is reflective of modern life and protected for future generations.
“Combined with our pension reforms that are helping more people than ever save into a private pension and reducing pensioner poverty to a near record low, these changes will give people the certainty they need to plan ahead for retirement.”
What it means for you?
Your current financial plan will need to be re-evaluated and adjusted to make sure your investments keep you on track for your planned retirement age.
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