MILLIONS of workers could have to work longer in a shake up of the state pension age.
People are being warned to plan ahead for the change so they have the cash they need for retirement.
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The age at which you can can get the state pension is currently 66 and that’s due to rise to 67 by 2028.
An increase to 68 has already been set out for between 2044 and 2046 – but that could take place earlier.
A review of when you can access your state pension is being done by the Department for Work and Pension.
It could see the rise to 68 moved forward to 2037 – and means millions of Brits born between April 6 1970 and April 5 1978 could face a longer wait to access their retirement cash.
The state pension is based on the number of years of National Insurance contributions you make and is currently worth up to £185.15 a week, though the amount rises each year.
You can access a workplace or personal pension at an earlier age than the state pension.
It’s currently 55, but that could also increase in future to 57, meaning you could wait longer to access that cash too.
You can stop working earlier though if you have access to cash not in a pension, like savings or income from investments.
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The review of the state pension age will consider if longer life expectancy means that Brits should work longer.
Though an earlier change to the retirement age has yet to be decided and would still have to be passed into law.
Richard Eagling, senior personal finance expert at NerdWallet said: “For many people, reaching the state pension age is the start of a new chapter in their life as it’s a time when important lifestyle changes may happen such as reducing working hours or planning to retire completely.
“However, changes to the state pension age can cause financial problems and stress, especially during the current cost of living crisis, as people will have to wait longer than expected to claim their state pension.
“This could see people working past their state pension age as, depending on their financial situation, they might not be able to afford to retire.”
The state pension alone is unlikely to be enough to live off for a comfortable retirement, and there are other ways to boost income later on in life by acting now, he added.
“It’s never too early to think about paying into a private pension to help achieve more comfortable financial security in later life,” he said.
Millions of people now pay into a pension automatically through their workplace.
It means you could have an extra pot of cash in retirement on top of the state pension.
Here’s how you can boost your personal or state pension cash for retirement.
Check your state pension entitlement
National insurance contributions are usually taken directly from your wages if you’re employed or via self-assessment for the self-employed.
To qualify for the new state pension you need at least ten years’ worth of national insurance contributions, and to get the maximum you need at least 35 qualifying national insurance years.
People often have gaps if they were unemployed, on a low income, or self-employed.
You can check how many years of NI payments you’ve made and see any missing years on the government website.
If you don’t have one already, you’ll need to create a government gateway account online.
You can also request a statement online, over the phone or by post, but writing to: National Insurance contributions and Employers Office, HM Revenue and Customs, BX9 1AN
The closer you get to retirement, the more important it is to check how many years you have.
If you have any gaps that mean you might not hit 35 qualifying years, you can still take action so you don’t miss out on the cash – here’s how.
Claim National Insurance Credits
National Insurance credits are a way of maintaining your National Insurance record when you are not making National Insurance contributions through work.
They help to build up qualifying years over time, which you can use to make you eligible for basic state pension and other benefits.
You can get National Insurance credits if the following applies:
- You’re on Jobseeker’s Allowance and not in education or working 16 hours or more a week or you’re unemployed and looking for work, but not on Jobseeker’s Allowance
- You’re ill, disabled or on sick pay
- You’re on maternity, paternity or adoption pay
- You’re a parent who has registered for child benefit for a kid under 12, you want to transfer credits from a spouse or you’re a foster carer
- You’re a carer on carer’s allowance, on Income Support and providing regular and substantial care or you’re caring for one or more sick or disabled person for at least 20 hours a week
- You’re a family member over 16 but under State Pension age and you’re caring for a child under 12
- You’re on working tax credit or universal credit
- You’re on a training course or jury service
- Your partner is in the armed forces
- You’ve been wrongly imprisoned
You can check the full list of who’s eligible for claiming credits on the government website.
It explains the circumstances where you’ll need to claim and when you’ll get it automatically.
You’ll either need to apply online or have to contact your local Job Centre to receive the credits.
You can check how to apply for each one on the same page.
You could also be missing out on all important credits if the wrong parent is claiming child benefit – here’s what you need to know.
Find a lost pension pot
It can be hard to keep track of where your pension pots are.
You can have many if you move jobs regularly – this is because companies have to auto-enrol staff onto a pension scheme so they can boost their retirement.
It could mean that you have a number of workplace pension pots – but around 1.6 million savers have lost track of where theirs are.
A new online tool, called a pensions dashboard, is expected to help workers track these savings – but it won’t go live until 2025.
In the meantime, your employer should be able to tell you where your pension money is if you have been auto-enrolled onto a scheme.
There may be a website you can login to where you can view who manages your pension, how it is invested and alter your contributions.
Pensions providers are also supposed to send annual statements to scheme members so check old paperwork or emails.
Check online if a provider has merged or been sold to another company as that could mean someone else is in charge of your pension.
If you still can’t find your lost pots, you can contact the Pension Tracing Service.
This is a free government service that lets you find your own workplace or personal pension scheme or someone else’s if they give permission.
Check how your pension is invested
Savers can increase how much they are invested in the stock market, which could increase the value of a pension pot by as much as £100,000 by the time they retire.
Typically you can increase the amount you’ll have in retirement by paying more into a pension each month or week through work.
But for anyone who is already saving the most they can, particularly in t he cost of living crisis, there’s still a way to grow a nest egg.
The money you save into a pension is invested for you to help your money grow over time.
money contributed to a workplace pension goes into something called a default fund.
Your money will be invested automatically into stocks and shares (equities), bonds and some of the money is held as cash too.
Savers can choose to increase the amount they have in equities, with the hope of increasing returns.
Default fund allocation to stocks and shares varies depending on the provider and your age, and can be anywhere between 35% and 100%, research from accountancy firm EY shows.
For young savers especially, taking more risk with their pension could be the only way to ensure a decent income in retirement in years to come, and avoid having to work for longer.
The older you get, generally the less risk it’s recommended you take with your pension savings, but all investors should be “looking under the bonnet” to see if they have the right level of investment risk.
Of course investments can go down as well as up, so think about changes carefully and speak to your pension provider to help you understand.
Meanwhile a pensions expert has explained how a Lifetime ISA and SIPP could get you extra cash in retirement.
And Martin Lewis has warned that more than a million pensioners are missing out on £3,300 a year on top of the state pension.
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