The State Pension age rise to 67 delays when people can start claiming their State Pension (Image: Getty)
The State Pension age rise to 67 in the UK will cost pensioners up to £4,182.52 on average from July 6.
The age increase from 66 to 67 affects the point at which people now become eligible to claim the State Pension, forcing pensioners to wait until they turn 66 plus a specified number of months before they officially reach State Pension age. The age rise is being phased in over a two year period until 2028 and got under way on April 6 this year. The change affects anyone born after April 6, 1960, but the impact it will have on your finances depends on when your birthday falls, with those who are younger set to miss out the most.
The next phase of the age increase will begin on July 6, affecting anyone born between July 6, 1960, and August 5, 1960. If you have a birthday within these dates you will reach State Pension age when you are exactly 66 years and four months old.
So for example, if your 66th birthday falls on July 6, you will officially reach State Pension age on November 6, 2026, at which point you will become eligible to start claiming State Pension payments.
This four month delay means losing out on four months worth of State Pension payments that you would normally have received when the qualifying age was 66.
The full new State Pension is now worth £241.30 per week, which amounts to £12,547.60 in pension payments over a full year if you have a full National Insurance record. Split across 12 months, this works out to an average of £1,045.63 per month.
So by having to wait an extra four months before being able to claim the State Pension, people with 66th birthdays between July 6 and August 5 are effectively missing out up to £4,182.52 in pension payments on average due to the age increase, if they’re eligible for the full amount.
And as the timetable for the age increase to 67 delays the point at which the State Pension can be claimed in one month increments, those with 66th birthdays in the next phase from August 6 onwards will lose even more.
According to estimates from the Office for Budget Responsibility (OBR), the move to 67 will save about £10 billion by the end of the decade, compared with keeping the State Pension age at 66.
Explaining the impacts of the State Pension age rise to 67, the Institute for Fiscal Studies (IFS) said: “Previous increases in the State Pension age (SPA) have been shown to cause some people to delay retirement and stay in paid work for longer.
“Employment rates of affected age groups have increased by about 10 percentage points in response to previous increases in the SPA. This effect is fully driven by people staying in their existing jobs for longer, rather than moving to a new job or re-entering paid employment after leaving the labour market.
“However, as only a minority of those affected respond to the reform by working longer, these increases only partially offset the direct loss of income as the SPA is increased.
“Previous research shows that average incomes are markedly lower among affected individuals, as they have to wait longer to receive their state pension.
“Lower household incomes also lead to an increase in income poverty – as the SPA was increased from 65 to 66, the income poverty rate of the affected age group (65-year-olds) rose from 10% to 24%, with the effects concentrated amongst those who were out of paid work.”
The DWP has confirmed the following timetable for the increase in State Pension age from 66 to 67, which shows when people with birthdays between April 6, 1960, and March 5, 1961 can claim their State Pension:
May 6, 1960 – June 5, 1960: can claim from 66 years and 2 months
June 6, 1960 – July 5, 1960: can claim from 66 years and 3 months
July 6, 1960 – August 5, 1960: can claim from 66 years and 4 months
August 6, 1960 – September 5, 1960: can claim from 66 years and 5 months
September 6, 1960 – October 5, 1960: can claim from 66 years and 6 months
October 6, 1960 – November 5, 1960: can claim from 66 years and 7 months
November 6, 1960 – December 5, 1960: can claim from 66 years and 8 months
December 6, 1960 – January 5, 1961: can claim from 66 years and 9 months
January 6, 1961 – February 5, 1961: can claim from 66 years and 10 months
February 6, 1961 – March 5, 1961: can claim from 66 years and 11 months
March 6, 1961 – April 5, 1977: can claim from 67 years
If you don’t know your State Pension age you can check on the HMRC app or on GOV.UK so you know exactly when you can start claiming it.
Explaining the importance of planning ahead, Sarah Pennells, Royal London Consumer Finance Specialist, said: “As the State Pension is the foundation of most people’s income in retirement, it’s important to know when you’re due to receive yours.
“If you don’t have this information, it’s much harder to work out how much you need to save in your workplace or personal pension, when you might want to take money out from your workplace or personal pension and how much to take.”