Rising state pension age
Millions of workers born in the 1970s may have to push back their retirement plans, if rumours about the state pension age rising to 68 earlier than planned come into force.
The state pension age is currently 66 for both men and women.
Two more increases are already set out in legislation. It will gradually rise to 67 for those born on or after April 1960 between 2026 and 2028, with another gradual rise to 68 between 2044 and 2046 for those born on or after 1977.
There are reports in the media that the review will recommend the increase to 68 be moved forward to the mid 2030s, and that this change could be announced as early as the Spring Budget, due to take place on 15 March.
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Reducing pension contributions
Some 7% of people have already reduced their pension contributions in the last six months, while 8% have stopped contributing to a pension altogether, according to a Which? survey of 1,800 people in November 2022. Among 18 to 34-year-olds these figures are 14% and 8%, respectively.
While saving for the future might not seem a priority given today’s cost of living pressures, cutting pension contributions could do more harm in the long term than good in the short term.
Which? calculated the impact of reducing or pausing pension contributions for three years, based on a 30-year-old with a salary of £30,000 and an existing pension worth £20,000. Halving individual contributions from 4% to 2% for three years would reduce their final pot by £4,000, while leaving the scheme completely for three years would see them missing out on more than £17,000.
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