Financial News: Retirees and Pensions News #1 - Anthony Rogers

You are going to have to start putting some money away for your retirement, or paying in more than you do now, and you are probably going to have to wait longer to get your hands on your state pension. That was effectively the message to millions of people this week when the government announced a wide-ranging review of the UK pensions system. The independent commission it launched will grapple with a host of thorny issues and make recommendations for change. Here are five things that might happen.

A higher state pension age The state pension age (SPA) is the earliest age at which an individual can start getting the state pension. It is now 66 for men and women but is scheduled to rise to 67 between 2026 and 2028. An investor checks a pension statement Ministers to revive Blair-era Pensions Commission to tackle savings crisis Read more As things stand, the SPA is then scheduled to increase to 68 between 2044 and 2046, affecting those born after April 1977. However, “a faster increase is definitely on the cards,” says Rachel Vahey, the head of public policy at the investment platform AJ Bell. Earlier this month, the Institute for Fiscal Studies thinktank put the cat among the pigeons when it warned that the SPA may have to be upped to 69 by 2049 and 74 by 2069 if the triple lock guaranteeing how much it will be worth is kept. The state pension provides the bulk of retirement income for most pensioners, so having to wait longer for it could have a huge impact on millions of people. Less take-home pay – but not yet Since 2012, employers have had to enrol eligible workers into a workplace pension scheme where both pay money in – this regime is known as automatic enrolment. The minimum contribution is a total of 8% – usually made up of 4% from the worker’s salary and 1% from the government in tax relief, plus 3% from their employer. However, most experts agree that 8% isn’t enough for a decent retirement income. It is not yet clear what level the government is leaning towards as a new minimum but pension providers and others have long called for the figure to be raised to 12%.