The current State Pension Age in the UK is 65 for men born before 6 December 1953. For women born after 5 April 1950 but before 6 December 1953, their State Pension age is between 60 and 65.
It is vital to have a retirement plan in place before you reach the State Pension Age, as this is very small (typically £107.45/week) and unlikely to provide enough income for a retirement plan. Though you can still work after the State Pension Age it is highly unusual for individuals to do so, as many prefer to relax, travel or spend extra time with loved ones during their retirement years.
When you reach State Pension age, you can
- Stop working and start to claim
- Carry on working and claim
- Carry on working and delay claiming
If you delay claiming, you may be able to get extra funds or lump sum payment when you do start claiming. This would also mean that you do not have to carry on paying National Insurance contributions.
The age at which you can claim is now set to increase to 66. This will increase more quickly for women (to 65 between April 2016 and November 2018). From December 2018 the age for both men and women will start to increase to 66 in October 2020. These changes affect you if you're: a woman born on or after 6 April 1953, a man born on or after 6 December 1953.
The current law already provides for the age at which you can claim to increase to: 67 between 2034 and 2036 and 68 between 2044 and 2046. However, the government announced on 29 November 2011 that this now increase to 67 between 2026 and 2028. This change is not yet law and will require the approval of Parliament.
With these increases set to come into place incrementally over the next several decades, it is more vital than ever to have a backup in place. Carefully planned provisions can help ensure that you have higher levels of income from an earlier age, be more secure, outpace inflation and be more tax effective.
It is a good idea to commit to a pension plan from the earliest possible age, so as to ensure that you retain enough income to replace that which you will lose when you stop working. Governments throughout the world are extending the time when you are eligible to receive pensions, making it essential that you consider the increased age at which you will likely retire, and the fact that increasing life expectancies mean pension funds will have to last longer. If you are relying on the government for income during your later years, you may find that the funds provided are inadequate (£107.45/week), making a properly planned retirement fund vital.
Accepting that most individuals will be forced to work longer than in the past, that does have the potentially beneficial factor that it means people have more time to save funds.
Another reason it can be vital to set up provisions for later years is to ensure that you have the necessary funds to provide for residential care and additional healthcare. These can account for substantial outgoings, meaning it is a good idea to have carefully arranged provisions in place you should need either of these services.
Potential retirement plan options include QROPS and QNUPS, both of which are highly tax efficient ways of making the most of your savings and providing a secure and stable income during retirement years, whilst at the same time preserving assets that are not used for the well being of your beneficiaries.
In addition to these, we offer a range of services that can help to increase your current income and maximise your savings. When professionally and effectively managed, QROPS and QNUPS provide not only higher levels of income for the pension plan holder, but also in many cases preserve assets for your chosen beneficiaries.
Pryce Warner International Group offer a service that (without charge) will review your existing pension and retirement plans, with the objective of obtaining solid growth and increased pension income for you. Contact us today to arrange a no obligation review of your pension and retirement planning.
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