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How the Pensions Bill will affect you

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As the Government's new Pensions Bill reaches its final reading in Parliament, here’s a quick guide to what's been said, and what these changes could mean for you.

An increase in the State Pension Age

The first key reform in this Bill is the increase in the State Pension Age. The State Pension Age is different from, and not linked to the Default Retirement Age – it is the age at which eligible people begin to receive their state pensions.

How the changes will be brought through

Under the current rules, the State Pension Age for women is in the process of rising from 60 to 65 to equalise with men; and then state pension age for both men and women was due to increase from 65 to 66 between 2024 and 2026. The Pensions Bill is bringing forward the timing of equalisation and the rise in the State Pension Age from 65 to 66 for both men and women.

  • Under the new legislation, women’s state pension age will reach 65 by November 2018.
  • The rise from 65 to 66 for both men and women will happen more slowly than the Government had originally planned and will be complete by October 2020.

The Government's change will lead to an earlier state pension age for just under half a million people. It particularly affects women born in 1953 and 1954 many of whom previously faced a delay of up to 2 years before they could claim their state pension.

Find out more about our state pension age campaign

Concern over those on lower incomes

Age UK is concerned that this change will hit the poorest hardest, as people on lower incomes are generally more reliant on their state pensions and have lower life expectancy.

Auto-enrolment

Better news is the new provisions about auto-enrolment. For the first time, all workers will have the right to a pension contribution from their employer unless they decide to opt out of the scheme. The new Government reviewed these plans and the Pensions Bill introduces some changes.

Age UK is pleased that most of the provisions remain - for example, there will be no exemption for small firms, who will have to pay pension contributions for their employees. The Bill provides for an optional waiting period of up to three months before the employee is automatically enrolled.

Michelle Mitchell, Charity Director of Age UK, commented:

'Auto-enrolment is a hugely important reform which means that for the first time, all workers will have the right to a pension contribution from their employer unless they decide to opt out of the scheme. While we have some concerns about the increase in the threshold and the introduction of a waiting period, we are pleased that there will be no exemption for small firms.'

What happens now

Age UK will be working to ensure that the Government invests in providing good-quality information and advice to help people understand the new pensions options available to them and make informed decisions about saving for retirement. We believe the bill brings both good and bad news for people in later life:

  • phasing out the Default Retirement Age is good for those that want to continue working past 65,
  • but plans to increase the State Pension Age more rapidly than previously planned is bad news for the millions of older people unable to work for longer.

opens link in new window Download the information guide Can I afford to retire? (PDF 955KB)

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Age UK Advice:
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Plan for retirement

Use our pension calculator to work out how to get ready for your retirement

Useful website

  • The Pension Service provides details of state pensions‚ including forecasts and how to claim your pension.

Useful information to download

  • Information on the financial issues to should consider as you approach retirement.
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