diamond geezer

 Monday, February 10, 2020

This is a post about changes to the retirement age - the date on which the state pension is first payable.
(I thought I'd do some research, because I didn't understand it properly)

Retirement age
1930W    M     
1935W    M     
1940W    M     
1945W    M     
1950W    M     
1955      E    
1960      E    
1965       E   
1970       E   
1975       E   
1980        E  
1985        E  
1990        E  
1995        E  
2000        E  
W=women. M=men. E=everyone

For those born prior to 1950, the UK retirement age was 60 for women and 65 for men.
The discrepancy arose because the pension rate for married couples only kicked in if both partners were over retirement age, and a five year gap prevented husbands with younger wives from losing out.

In 1995 the Conservative government came under pressure from Europe to equalise retirement ages for men and women, so responded by (gradually) increasing women's retirement age from 60 to 65. The plan was for this to be complete by 2020, i.e. for those born in 1955.

In 2007 the Labour government decreed that the retirement age should rise from 65 to 66 by 2026, to 67 by 2036 and to 68 by 2046. Delaying the start of state pension payments would save billions of pounds.

In 2011 the Coalition govermnent sped up the process, legislating to raise the retirement age to 66 by 2020 and 67 by 2028. Officially at least, the increase to 68 remains in 2046. Those born from 1955-1960 therefore get to retire at 66, those born from 1961-1977 at 67, and those born after 1977 at 68.
Precise retirement dates vary according to birthday. You can check your state pension start date here. The official State Pension age timetable provides a comprehensive overview.

Where things got complicated was for those born between 1950 and 1955, as this next table shows.

Retirement age
1950W    M     
1951WW   M     
1952 WW  M     
1953  WWWE     
1954     EE    
1955      E    

Here we see the effect of gradually delaying women's pension age from 60 to 65, not in a single leap but staggered month by month. For example women born at the start of 1951 got to retire at 60 years 8 months (in September 2011), but those born at the end of 1951 had to wait until 61 years 8 months (in September 2013). This wasn't popular, but because it was announced well in advance women had over 15 years to prepare themselves.

Things got even more complicated when George Osborne raised the target to 66 instead of 65 partway through the process. Women born in 1953 therefore suffered from the imposition of an accelerated timeline, this time with barely five years' notice.

Retirement age
Jan 1953  W  M     
Apr 1953   W M     
Aug 1953    WM     
Dec 1953     E     
Oct 1954      E    

Specifically a woman born on 1st January 1953 got to retire at 62 years 8 months (in September 2015), whereas a woman born on 31st December 1953 had to wait until 65 years 3 months (in March 2019). If you've seen Fifties-born 'Waspi' women in the news protesting loudly about loss of anticipated income, this is why.

Men and women reached retirement equality on 6th December 2018. Since then the pension age has continued to nudge up, month by month, affecting the retirement dates of all those born during 1954. The new retirement age of 66 years, precisely, kicks in on 6th October 2020. We are very nearly there.

Here's another way to look at things.

Year born
Years to go--16121722283338

Those born in 1955 still have a year to go before their state pension is payable, at 66 rather than 65. As someone born in 1965, I have to wait until I'm 67 (in twelve years' time). The leap to 68 begins with those born on 6th April 1977, and is complete one year later (in the spring of 2046). This is the current situation in law.

Of course all this assumes that no further tweaks will be made, whereas in fact further delays are inevitable. The latest government review proposes that the UK retirement age be increased to 68 "between 2037 and 2038", affecting all those born after 5th April 1970. It also proposes to "maintain the pace of change" with further increases at approximate ten year intervals. Those born in the 1980s shouldn't expect to see their state pension before they're 69. Nineties babies will have to wait for 70.

Year born
Years to go--16121723293540

One big reason why retirement age is increasing is life expectancy.

Life Expectancy
After Retirement
Retirement year

Back in 1960 a man reaching retirement could expect, on average, 12 further years to enjoy their state pension. Today it's 18, which is great for individual men but a mountain of extra money for the government to find. As for women, until very recently they've enjoyed the double bonus of retiring earlier and living longer. Equalising the pension age has knocked the average length of female retirement down from a peak of 25 years, but it's still longer than it was fifty years ago... and still longer than for men.

The underlying actuarial intent, according to the latest government review, is to maintain a two-to-one balance between our working years and our retirement.

20 years
two-thirds of adult life

So as we live longer, we need to collect our pensions later. But then they would say that, wouldn't they?

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