Yesterday (December 5) marked the last day on which people could claim their state pension at the age of 65, as previously announced increases by the government came into force.
The changes mean men and women will see their state pension age gradually increase from 65 to 66 between today (December 6) and October 6, 2020. But the date they can claim their benefits will depend on a ‘birthday lottery’.
This is because for the next three months state pension commencements have ceased, meaning everyone, male and female, with a birth date between December 6, 1953 and January 5, 1954 will be eligible to start receiving their state pension from March 6, 2019 only.
David Robbins, senior consultant at Willis Towers Watson, explained someone born on February 5, 1954 will have received eight weeks and five days’ worth of state pension, before someone born the following day can start claiming.
He said: "If both are entitled to the full new state pension, worth £168.60 a week in 2019-20, the difference comes to £1,469 before tax – a meaningful amount of money to hinge on a quirk of the mechanism for increasing state pension age that Parliament selected."
Tom Selby, senior analyst at AJ Bell, said a state pension age increase "probably isn’t what most people asked for in their Christmas stocking, but that will be the reality for many people who are about to turn 65".
He added: "The short-term impact on people’s finances could be significant. At the lower end, a three-month rise in the state pension age could cost someone over £2,000 in retirement income. Those who have to wait a full year longer could miss out on over £8,000 in state pension.
"This might feel like a cruel lottery for those immediately affected, younger generations will need to prepare for rises in the state pension age to 67 and 68.
"For most savers – and particularly younger people – the clear signal coming from the state is that if you want security in retirement, you need to provide it for yourself."
According to research from Aegon, the government will save about £11bn a year after 2028 due to increases of the state pension age.