State pension age rises force retirement plan changes – ‘vital’ funding guidance issued

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State pension ages have been steadily rising in recent years as state legislation pushes retirement ages upwards. Currently, most people will reach their state pension age on their 66th birthday but this will rise over the coming years.

Canada Life detailed changes to state pension legislation have impacted the retirement plans of homeowners over 40, with only a quarter saying they will retire at their state pension age.

Nearly a third (31 percent) of respondents said they plan to work beyond their state pension age, with this increasing to 50 percent of the over 60s.

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Equally, 34 percent plan to finish up work early and retire before their nominated state pension age. One in ten (11 percent) said they had already stopped working before their state pension kicked in.

When asked what they expect their main source of income to be in retirement, nearly a third (28 percent) of homeowners aged 40 and above expect the state pension will provide the “bedrock” of their income (22 percent for men vs 36 percent for women), even with the full state pension currently standing at just £179.60 per week, or £9,350 per year.

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When looking at what sources of income will be incorporated into retirement planning, a gender gap emerged.

Canada Life noted while men and women both expect to rely on the state pension equally, gaps emerged in the following assets:

  • Workplace pension – 67 percent (73 percent for men vs 61 percent for women)
  • Personal pension – 34 percent (38 percent for men vs 29 percent for women)
  • ISAs – 26 percent (30 percent for men vs 22 percent for women)
  • Financial investments – 15 percent (19 percent for men vs 11 percent for women)

“However, the amount received is not generous by any standard and, as a result, the onus is on individuals to take personal responsibility to save for retirement.

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“Employees can build on the state pension and any workplace savings they have.

“Self-employed people face more of a challenge as they don’t have an employer to help fund their retirement.

“As the goalposts for the state pension shift, it is vital people check their state pension age, the amount they are due to receive, and whether they are eligible for the full state pension.

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“It’s equally important that those who have spent time out of employment check their record, claim any National Insurance credits possible, and think about making any top-ups in order to be entitled to as much state pension as possible.

“Taking a proactive approach, seeking the help of an adviser, and making good decisions now will all help to fund retirements.”

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