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State pension age warning as Government may change policy again | Personal Finance | Finance

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Many older Britons rely on the state pension to pay for everyday essentials, so raising the age when people can claim puts more pressure on people’s finances. The new full state pension is currently £181.15 a week and could increase to more than £200 if the triple lock is reinstated next year.

Simon Jones, CEO of warned the Government may change its policy as the state pension becomes more expensive to fund.

He told “The Government currently plans to increase the state pension age from 66 to 67 between 2026 and 2028, and again to 68 between 2044 and 2046.

“But all this is subject to review, and the Department for Work and Pensions (DWP) is expected to issue proposals for a revised timetable next year.

“Because people are living longer, it’s becoming more expensive every year for the Government to fund the state pension.

READ MORE: Half a million pensioners to miss out on state pension rise due to where they live

“To get out of the hole, a future Government may well shift the goalposts further and increase the state pension age to 70.”

With average energy bills rising to £2,500 a year this month and the soaring cost of other essentials, many pensioners will be struggling to cover their costs this winter.

Mr Jones said: “For those reaching the state pension age after April 2016, they currently receive around £185 a week, which represents very thin gruel indeed.

“It really is shocking to think that currently one in three people expect they will have nothing more to retire on.


“Even if the Government’s triple lock commitment remains, most people in the country would struggle to make ends meet on that kind of money.”

He urged people to start planning their finances for their retirement years as young as possible.

The investment expert said: “It’s vital to start investing young, so you have a decent nest egg in your golden years.

“The good news is, you don’t need to be a whiz kid to build up a war-chest of £1million, assuming you start investing early and stay the course.

READ MORE: State pension age is changing again – how to check earliest age you can get payment

“By law, all company employees have been auto-enrolled into workplace pensions since 2012.

“Employees typically pay five percent of their wage paid into a pension while the legal minimum employer contribution is three percent, with some bosses being far more generous.

“Whatever your employer’s contribution, it’s free money and you should be glad of it. But ask yourself if it’s really going to be enough to retire on.

“At present, the average UK pension pot after a lifetime of saving stands at just £61,897. You certainly won’t be living the rock star lifestyle on that kind of money.”

He said a good principle is to invest 15 percent of one’s salary into a pension each year, from the first day they start working.

He also encouraged Britons to set up a 100 percent equity fund while a person is young, so the stocks can grow despite ups and downs in the market.

People should be aware that investments do carry the risk of decreasing in value meaning a person may lose money compared to what they put in.

Mr Jones also said people can look at opening a stocks and shares ISA, as the funds are usually invested in the same companies as a pension fund would buy into, but this way the individual can access the money at any time.