Q: Why is the government planning to end the default fixed retirement age?
A: Many people are not saving enough for retirement and risk not having the income they would hope for if they retire at the ‘traditional’ age of 65.
By working for one year past the existing state retirement age, currently 60 for women and 65 for men, people could potentially increase their retirement income by between 3 per cent and 10 per cent. The government says it wants to tackle age discrimination, but this move will also alleviate the burden on the state.
Q: Am I able to work beyond 65 now if I want to?
A: This will ultimately depend on your own employer. Employers do not have to retire employees once they reach 65, and are free to continue to employ them as long as they wish, but some may require you leave at 65.
Q: Will I still be able to retire at 65 under the new proposals?
A: Yes. The government has not indicated that it will prevent people from retiring at 65.
Q: Will I be able to retire even earlier?
A: Some people with private pensions are already able to retire from the age of 55. Individual employers may allow you to retire early.
Q: Will I be able to contribute to my company pension beyond 65?
A: Yes, you will be able to keep contributing to your pension. You can continue to make pension contributions and receive tax relief up to your 75th birthday.
Q: If I work longer, can I save less for retirement?
A: No. The government wants workers to contribute more to their pension provisions, not less. The larger your pension, the less of a burden as a retiree you might be on the state.
Q: Does the change affect my state pension entitlement?
A: The state pension has its own timetable, which is also currently under review. The government is consulting on how it can accelerate the planned rises to the state pension age more quickly than is currently legislated for, initially to age 66 but ultimately to 68.
The government has yet to announce whether those working longer will be able to defer their state pension. If you take it at age 66 but work until you’re 70, you would pay tax on your state pension as if you are still working, so there are plenty of details to be ironed out by the government.
