When can you retire?

An opaque outlook for the official state-pension age makes planning harder.

older couple looking at finances
(Image credit: © Getty Images)

When will you be able to claim your state pension? The answer to such a basic question remains uncertain as ministers debate how to balance the rising cost of pensions and the impact of demographic change.

And that could make planning your retirement more challenging. Remember that the state pension age does not determine when you can retire.

It is simply the age at which you can start to claim your state-pension benefits; if you want to stop work before that age – or, indeed, after it – there’s nothing to stop you doing so. And you can typically start taking money out of private pension schemes from the age of 55 onwards.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Still, for most people, the state pension is an important part of their retirement planning. It provides a foundation for your income, which can then be supplemented with private-pension benefits.

This year, the state pension is worth around £10,600 if you have a full entitlement, and its value currently rises each year in line with the triple-lock guarantee, protecting it from inflation.

Knowing when you will be able to access this money is therefore important. And while the system is set in stone for the next few years, the rules thereafter are much less certain.

The state-pension age for both men and women is 66. This is due to rise to 67 over a two year period between 2026 and 2028 (the age at which you can access most private pensions will rise to 57 at the same time).

When will the state pension age rise?

The next step is a planned rise to age 68. As pensions legislation currently stands, this increase is due to be implemented over two years between 2044 and 2046.

However, a review of the system conducted in 2017 recommended that this should be brought forward to 2037- 2039. The government said it agreed with this suggestion, but ministers have never introduced legislation to adopt it.

Muddying the waters further, Mel Stride, the work and pensions secretary, said last month that a final decision on this increase would be taken by the next government, rather than in the current parliament.

Stride said he thought a rise before the 2040s was unlikely, but no firm decision will be made until after the next election, which could be as late as January 2025.

The debate is a difficult one. The Institute of Fiscal Studies calculates that delaying a one-year increase in the state pension age by seven years – that is, sticking with the current plans rather than bringing them forward – would cost the Treasury around £50bn in today’s money.

On the other hand, the steady increases in average life expectancy that the UK has enjoyed in recent years – justifying a later state pension age – appear to have stalled.

When can you claim your state pension?

Nevertheless, the confusion has real impacts. If you’re currently aged 52 to 62, you know you will be able to claim your state pension on your 67th birthday.

But those savers currently aged between 45 and 52 – those born between 1971 and 1978 – can’t be sure how long they will have to wait. If you’re saving with the aim of retiring on a certain date, that makes planning challenging; you won’t know when you can start taking your state pension into account.

In the absence of clarity, be conservative – assume you’ll be eligible for state pension later rather than sooner. However, ministers have previously promised not to make changes without giving at least ten years’ notice; given the parliamentary timetable and the time new legislation takes to pass, that makes an increase to age 68 unlikely before the late 2030s at the earliest.

In the meantime, the government has a free online tool to check your state pension age (gov.uk/state-pension-age). Just bear in mind it reflects the current arrangements.

David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.