Prospect of enjoying retirement grows weaker for millions
Fewer people are claiming the state pension amid rises to the state pension age.
23rd February 2021 11:03
by Rebecca O'Connor from interactive investor
Fewer people are claiming the state pension amid rises to the state pension age.
The Department for Work and Pensions (DWP) this morning published benefit statistics showing:
- In the year to August 2020, the number of people receiving the State Pension fell by 1.6% or 200,000, to 12.4 million amid rises to the State Pension age
- 55% of people claiming benefits are ‘Pension Age’: 12.5 million of a total 22.8 million
- 30% of State Pension age claimants are claiming more than one benefit
- 82,000 fewer Pension Credit claimants to 1.5 million. 65% are women
Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “Increases to the State Pension age are saving the government money, but the personal cost of these rises can be significant for those due to retire.
“The State Pension makes up a large proportion of retirement income for those who receive it. It is likely this proportion will grow larger, as more people retire with less generous defined contribution pensions, rather than final salary schemes.
“The State Pension Age and the Normal Minimum Pension Age are set to increase further, to 67 and 57 respectively and then again.
“As the goalposts shift, the prospect of enjoying a retirement grows weaker for millions of people. Our working lives are getting longer, but this is not necessarily aligned to a rise in healthy life expectancy, which is falling, particularly for women. Healthy life expectancy is 62.9 years in good health for males and 63.3 years for females, according to the ONS. So State Pension age rises will require more people who don’t have access to a work or personal pension to work through age-related ill health.
“For workers, this serves to underscore the need to contribute as much as possible to a workplace or personal pension while you are in employment, to reduce your individual dependence on the State Pension when you retire.”
Interactive investor’s Great British Retirement Survey 2020 found that rises to the State Pension age, which have most dramatically affected women in their early 60s, had caused significant hardship for some and forced many to work beyond the age at which they had planned.
More than one in three (35%) women responding to the survey said that rises to the State Pension age had derailed their retirement plans, rising to 64% of those aged 60 to 65.
Notes to editors
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.