Research has shown the lack of awareness about the next change to the State Pension Age (SPA).
Changes to SPA have proved fertile grounds for controversy. The move to equalise women’s and men’s SPA at 65, completed in November 2018, is still a source of dispute. In March 2024, the Parliamentary and Health Service Ombudsman (PHSO) published a report recommending that the women affected by that change should each receive up to £3,000 compensation.
A couple of days before parliament rose for its Christmas 2024 recess, the government announced that it disagreed with the PHSO and would not be following its recommendations. Despite members of the government having sounded much more supportive of the affected women while on the opposition benches, the move was no surprise given that the suggested compensation raised a potential bill of up to £10.5 billion.
The PHSO argued that past governments had not communicated clearly enough to inform the affected women about their SPA changes. This lack of clear information occurred even though the equalisation of SPA was initially made law in 1995 (with a final target of April 2020). That date was moved earlier to November 2018 by new laws in 2011, which also brought in another SPA increase to 66 by October 2020.
Next change on the horizon
The phasing in of the next SPA increase to 67 starts in less than a year and ends in April 2028. You might have thought that the protracted debate and well-publicised legal arguments about equalisation would have meant that those affected (anyone born after 6 April 1960) knew about the change. However, recent research by the Institute for Fiscal Studies (IFS) revealed that many people remain unaware.
The IFS found that among people born between 1955 and 1965 who were interviewed between 2021 and 2023 as part of a long-term study of ageing, 40% were unclear on their position:
- 60% knew their SPA to an accuracy of within three months.
- 18% overestimated their SPA, expecting it to be higher than legislated.
- 11% underestimated their SPA.
- 11% fell into the ‘Don’t know’ category.
As the IFS noted, “Knowing one’s state pension age is crucial for financial and retirement planning.” After all, for current pensioners, on average, the State Pension makes up about 44% of overall income, according to the IFS.
Which category do you fall into? If you want to prove yourself right – or wrong – on your SPA, check at: https://www.gov.uk/state-pension-age.
To discuss your financial planning, contact our Sheffield based Financial Advisers on 0114 266 4432 or info@smh.group
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