People on account of retire subsequent yr could also be in for state pension shock

A recent study found that only 40% of people know exactly when they will be eligible for their state pension with many way behind on planning for their life in the future

People who are expecting to retire in 2026 could be in for a shock as they might not actually be due their state pension. A planned increase to the pension age could mean they actually need to wait another year.

A recent study has disclosed that one in five individuals are oblivious to the forthcoming alterations to the state pension age and its implications for them. The existing state pension age is 66, but it’s slated to ascend next year, with a gradual increment eventually reaching 67.

As reported by Express.co.uk, those born between April 6, 1960, and March 6, 1961, will be most impacted by this modification. A lack of comprehension regarding this rise could prompt people to make substantial financial decisions, such as settling debts, quitting their jobs or moving, under the presumption that they’ll soon start receiving their state pension payments, only to find out that it may be postponed by up to a year.

The WASPI campaign is championing for women born in the 1950s who were not adequately informed about similar age changes that affected them. However, despite information on upcoming state pension age changes being readily accessible, many remain worryingly uninformed.

A study conducted by the Institute for Fiscal Studies discovered that merely 60 per cent could accurately pinpoint when they’ll be eligible for the state pension. This percentage was slightly higher for those due to receive the payments at age 66, prior to the next alteration. Nevertheless, those directly impacted by the change scheduled for next year were the least accurate.

A shocking 59 per cent of this age group were incorrect, with an astounding 42 per cent assuming they’ll only start receiving their state pension years later than they actually would. The survey revealed that a worrying 12 per cent of people incorrectly thought they would be eligible for their state pension sooner than the reality, with five per cent confessing total ignorance as to when they would receive it.

Alarmingly, some 22 per cent of respondents believed they’d qualify for the state pension earlier than what is factual. The Institute for Fiscal Studies (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 study, which covered the years 2021 to 2022 and focused on individuals born from 1955 to 1965, pinpointed certain demographics such as women, the self-employed, and those on lower incomes as being especially susceptible to these misapprehensions.

The IFS professionals 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. And for most, the state pension will represent a large part of their retirement resources.”

Given these findings, the IFS has urged the government to take measures, recommending that personalised letters should be sent to individuals on reaching the age of 50. This would provide essential clarification about the specific age they could access state pension benefits, thereby equipping them with key information well in advance and helping to preclude abrupt and profound changes to the state pension age by policymakers.

To confirm your state pension age you can use the government’s online pension calculator here.