Speculation that the State Pension age could potentially jump up to 71 has made headlines in the past month. While this might initially sound like cause for concern, it’s not worth losing sleep over. Here’s why…

There are two key things to note at the start. The first is, the suggestion that the State Pension age could move up to 71 came from a think-tank report from the International Longevity Centre, not from the government or government policy. Secondly, the hypothesis is based on one metric only – maintaining the current level of active workers per pensioner. In reality, there are many other things that factor into setting the State Pension age.

When it comes to cutting through the noise of the news cycle, it’s always best to focus on what we know to be true instead of worrying about hypotheticals. Right now, we know that the State Pension age is 66 and will rise to 67 between 2026 and 2028. It’s then scheduled to move to 28 between 2044 and 2046. Beyond that, we have no idea or control over what will happen to the State Pension age. 

 

Can I live on the State Pension?

While it’s a helpful boost to income, it’s wise not to rely on the State Pension to fund your retirement. Currently, the full State Pension amount is around £10,000 per year. According to the Pensions and Lifetime Savings Association that’s not enough to cover a minimal standard of living for a single person.

Instead, it’s a good idea to focus on building our own pension pot. Here’s three things you could do today to get you in good stead to build a healthy retirement fund:

  1. Find and combine old pensions

There’s now approximately £26.6 billion sitting in forgotten pensions in the UK. If you’ve had multiple jobs in the past decade, you may have pension savings you didn’t even know existed!

Tracking down old pension pots will give you a better idea of how much you already have set aside for retirement, and how much you should save. You could choose to combine your old pension pots into one Moneybox Pension, which you can view, track and manage all within the app.

 

  1. Check your workplace benefits

If you have a workplace pension, it’s worth checking that you’re making the most of the benefits. Your employer is required to contribute a minimum of 3% to your pension, but some employers will increase their contributions if you do the same. Others may even match them. Employer contributions are essentially free money and will really help you build up your savings.

If you’re self-employed, you generally won’t benefit from them but there are other ways to make sure your money is working harder for your retirement goals.

 

  1. Make the most of pension tax relief 

Saving into a pension is one of the most tax-efficient ways to build up your retirement fund. That’s all thanks to pension tax relief – a 25% government top up on your contributions, which is essentially what you would have paid in tax on your earnings. Over time, your savings + tax relief + interest = a retirement fund worth waiting for. This is especially useful for those self-employed people, who don’t have access to workplace pensions.

 

With a Moneybox Pension, you can find and combine your old pensions, get 25% top ups on everything you contribute automatically, and see all your money in one place. Ready to get your retirement on track?

Pension & tax rules apply. 

 

Explore the Moneybox Pension

 

 

Focus on your pension

If you view the State Pension as an additional stream of income on top of your own retirement pot – rather than your sole income – you don’t need to sweat changes to the State Pension right now.

So personally, beyond periodically checking my State Pension record and making sure it is up to date, I won’t really think about the State Pension until I’m 50. In the meantime, I’ll focus on my personal and workplace pension contributions.

 

 

Important to know

As with all investing, the value of your pension can go up and down, and you may get back less than you invest. When deciding whether to transfer your pension, it’s important to compare the charges, investment options & benefits between Moneybox and your old provider. Moneybox cannot accept a transfer from a pension your employer is currently paying into. You can only access your pension once you reach the minimum pension age. Pension tax rules apply.