Analysts are sounding the alarm that millions of Britons could be in line for a financial shock next year as the state pension age is set to increase from 66 to 67.
The change, scheduled for 2026, will particularly affect those born between April 6, 1960, and March 6, 1961 with many people reportedly being unaware of the changes.
Experts are warning that a lack of awareness could lead to serious financial consequences for those making major life decisions based on incorrect assumptions about when they will receive their state pension.
For example, some individuals might pay off debts, quit jobs or relocate, only to discover their pension payments will be delayed by up to a year.
The state pension age rise could result in a financial shock for Britons
GETTY
A study by the Institute for Fiscal Studies (IFS) has revealed that only 60 per cent of people can accurately identify when they will be entitled to state pension.
Those due to receive payments at age 66, before the upcoming change, were slightly more knowledgeable. However, people directly affected by next year’s increase were found to be the least informed about their pension age.
This knowledge gap exists despite information about the state pension age changes being widely available on the Government’s website.
The study revealed that 59 per cent of respondents were incorrect about when they would receive their state pension. A staggering 42 per cent believed they would only get their state pension years later than they actually would.
The Waspi women have campaigned for compensation in the wake of DWP “maladministration” in its handling of pension age changes
GETTY
Meanwhile, 12 per cent thought they would receive their pension sooner than the reality. A further five per cent admitted they had no idea when they would become eligible for payments.
Overall, 22 per cent of people believed they would get their state pension sooner than they actually will.
The IFS experts warned: “Together this means that more than one in five people have knowledge gaps that can lead to them making possibly poor decisions about their savings or when they retire.”
The research identified certain groups at higher risk of misunderstanding their pension age. Women, self-employed individuals and people on low incomes were more likely to be incorrect about when they could claim their state pension.
According to the IFS experts, these findings indicate that “people who are potentially less financially secure are more likely to face financial risk because of their lack of understanding.”
They added: “Some of those people may therefore be making these critical decisions based on incorrect assumptions about when they can start claiming the state pension.”
LATEST DEVELOPMENTS:
Pensioners have struggled with the cost of living in recent years
GETTY
In light of these concerning findings, the IFS is urging the government to take proactive measures.
They recommend that people should receive official notification about their likely state pension age on their 50th birthday.
This early communication would ensure individuals are well-informed well in advance of retirement.
It would also help prevent situations where people are caught off guard by government changes to the state pension age.
