Qualified Financial Advisor
The Social Welfare and Pensions Act of 2011 changed the age at which citizens could qualify to receive the State Pension. Up to then, a person at work was entitled to receive a Transition Pension payment when they reached their 65th birthday and the State pension commenced at age 66. This Act removed the Transition payment entirely thereby increasing the retirement age to 66.
For those born in 1955 or later the Pension will commence when they reach 67; for those born in 1961 and later the pension age will be 68.
The State pension is worth about ?12,000 per year and for many people it will be the main or sole benefit they will receive in old age. At the stroke of a pen, hundreds of thousands of citizens were deprived of a future income of up to ?36,000 each. The biggest losers from this measure are the young because every person under age 50 in 2011 and everyone not yet born will be most affected.
In addition to increasing the qualifying age for State pensions, changes have also been made to the qualifying criteria for the Contributory State Pension. While the criteria is very complex, you will need to have paid social insurance contributions before a certain age; have a certain number of social insurance contributions paid and have a certain average number over the years since you first started to pay.
Potentially, this has the ability to further hit young people in their old age because they may only qualify for a proportionate pension payment.
Looking at our society today, we see young people are staying in education for longer; are not getting into the jobs market until later in life and their working life may be 10 or more years shorter than their parents or grandparents.
Life expectancy is increasing as more people are living for longer, putting even more pressure on a state pension system designed to meet 19th century