Latest news with #Rathbones
The Independent
16 hours ago
- Business
- The Independent
Revealed: The age group most affected by pension changes – and how much they could lose
The age bracket which stands to lose out the most from potential changes to the state pension age has been revealed after Labour's recently announced review into the current age of retirement. Millions of workers could lose more than £17,000 if an increase to the age at which the state pension can be claimed is moved forward, analysis by a wealth management firm has found. This is one of the more commonly speculated possibilities that could come from the government's state pension review, announced by work and pensions minister Liz Kendall last week. Governments are legally required to carry out a review of the state pension age every six years. The last one concluded in 2023, while this one is due to finish in 2029. It must give at least 10 years' notice for any state pension age change. Currently set at 66, and rising to 67 by 2028, the state pension age is the point at which a person is able to retire from work and receive the government-funded state pension. The figure is set to rise to 68 by 2046, but there is a strong possibility this is pushed forward by ministers in a bid to rein in massive spending on the state pension. Such a move was actually proposed by the previous pensions review, suggesting the rise to 68 be completed by 2039, but was never acted on by the government. New analysis by wealth management firm Rathbones has now found that if the deadline was pushed back even to 2039-41, workers aged 51 to 53 now would stand to lose out the most. This is because they would lose a full year of state pension payments that they would otherwise be receiving. Because of the triple-lock guarantee, which sees the state pension rise by at least 2.5 per cent every year, workers currently aged 51 would lose out on £17,774 from the change, Rathbones calculated. For those aged 52, it would be £16,918, and for those aged 51, it would be £17,340. Rebecca Williams, divisional lead of financial planning at Rathbones, said: 'With longevity increasing and population pressures mounting, future generations appear set to face a less generous state pension regime than that enjoyed by many of today's retirees. The situation appears particularly precarious for those in their early 50s who face real prospect of missing out. 'The state pension alone is not enough for a comfortable retirement. Individuals need a broad foundation built on workplace pensions, private savings, and the ongoing support of pension tax relief. Cracks are beginning to show in the system, and they must be addressed urgently if we are to maintain faith in the UK's pension framework and ensure people are equipped not just to survive, but to thrive in later life.' In her statement last week, Ms Kendall had noted that by the 2070s, the number of pensioners is expected to have increased by over 50 per cent, whereas the working age population will have only grown by over 10 per cent. She said that this makes 'it even more imperative to help future pensioners put into a savings pot they can rely on in the future'. Ms Kendall warned: 'My big worry is, so many young people have not even got a hope in hell of getting on the housing ladder, they're being absolutely killed by their rent, and if you are paying off your mortgage in retirement, or still renting in retirement, that is what is driving this sort of tsunami of pensioner poverty that is coming our way.' The minister told reporters: 'Put simply, unless we act, tomorrow's pensioners will be poorer than today's, because people who are saving aren't saving enough for their retirement. 'And crucially, because almost half of the working age population isn't saving anything for their retirement at all.'
Daily Mail
2 days ago
- Business
- Daily Mail
Millions of workers could lose £18,000 in state pension if they have to wait until 68
Millions of people in their early 50s could miss out on up to £18,000 if the state pension age is hiked to 68 faster than expected, new research reveals. A new Government review of the state pension qualifying age has triggered speculation it might have to rise substantially to contain rapidly rising costs. The state pension is currently worth £230.25 a week or nearly £12,000 a year if you have paid enough National Insurance years to receive the full amount, and it starts at age 66. The qualifying age is already set to rise to 67 between 2026 and 2028, and then the next increase is technically not scheduled until the mid 2040s, which will affect those born from 6 April 1977. The Government is expected to give at least 10 years' notice of a change in the timetable, but it could act straight after the current official review concludes in 2029, according to wealth manager Rathbones. This could mean the rise to 68 is accelerated to 2039-41, which would affect workers now aged 51, 52 and 53, it says. Rathbones has crunched the numbers for future rises under the state pension triple lock, and reckons the annual amount could hit £17,774 in the year someone who is 51 now turns 68. When a 52-year-old is 68 - in 15 years' time - they could miss out on a year of state pension worth £17,340. And someone who is 53 now could lose out on £16,918. That is based on the state pension rising by at least 2.5 per cent a year, which is the minimum increase required under the triple lock pledge - so could easily be higher, unless politically difficult steps are taken to soften the popular guarantee. The triple lock means the state pension increases every year by the highest of inflation, average earnings growth or 2.5 per cent. The Government has promised to stick to the triple lock for the whole of this parliament. Although questions have been raised about affordability the Government has effectively, if not in so many words, told the experts working on the next two state pension age reports to operate under the assumption the triple lock pledge will remain in place indefinitely. How much does a comfortable retirement cost? What YOU will need The Government is required by law to review the state pension age every six years, so it has ordered two reports which will look at when to hike to 68. It will examine this in light of life expectancy, public spending and population trends. But a recent report by independent think tank, the Institute for Fiscal Studies, warned that without reform of the state pension triple lock, the retirement age would have to rise to 74 by 2069. Meanwhile, the Government has launched a new Pensions Commission to try to stop future retirees ending up poorer than older people today. It says nearly half of working age adults are saving nothing at all into a pension - despite the success of auto enrolment into work schemes - and nearly 15million people are under-saving for retirement. Rebecca Williams, a financial planning boss at Rathbones, says: 'With longevity increasing and population pressures mounting, future generations appear set to face a less generous state pension regime than that enjoyed by many of today's retirees. 'The situation appears particularly precarious for those in their early 50s who face a real prospect of missing out.' She says people in their late 40s and early 50s have come to her firm asking for help getting their retirement finances on track, given the shifting goalposts when it comes to pensions. 'The state pension alone is not enough for a comfortable retirement,' cautions Williams. 'Individuals need a broad foundation built on workplace pensions, private savings, and the ongoing support of pension tax relief. 'Cracks are beginning to show in the system,' she warns.
Telegraph
2 days ago
- Business
- Telegraph
Millions to lose up to £18,000 in savings from pension reforms
Millions of workers in their 50s face losing up to £18,000 if the Government accelerates a rise in the state pension age, a leading wealth manager has warned. Rathbones, which manages the savings of older people, said introducing a state retirement age of 68 earlier than planned threatened to hit people aged 51 the hardest, while people aged 52 and 53 would also lose out. The Government is exploring whether to raise the state pension age to 68 more quickly. It is currently set to be phased in from 2044, but Liz Kendall, the Work and Pensions Secretary, is considering bringing this forward five years to 2039 as part of the Government's pensions review. According to Rathbones, those aged 51 would lose an entire year's worth of state pension payments if the timetable is accelerated. That would be worth £17,774, assuming today's state pension of £12,000 increases by the so-called triple lock each year. Under the triple lock, the state pension rises by the highest of inflation, average wages or 2.5pc per year. Meanwhile, people aged 52 would miss out on £17,340 and those aged 53 would lose £16,918. Each of those age cohorts – 51, 52 and 53-year-olds – comprise some 800,000 people, meaning around 2.4 million risk missing out on significant five-figure sums. Rebecca Williams, from Rathbones, said Britain's ageing population would put a growing strain on the public finances. She said: 'With longevity increasing and population pressures mounting, future generations appear set to face a less generous state pension regime than that enjoyed by many of today's retirees. 'The situation appears particularly precarious for those in their early 50s who face the real prospect of missing out.' The state pension age is currently 66 and will rise to 67 by 2028. Spending increasing Raising the state pension age is likely to prove politically challenging. Previous pension reviews recommended increasing the pension age in the late 2030s, but the move was not put into legislation. However, financial pressure is growing, and Ms Kendall acknowledged when launching her review that she was 'under no illusions' about the scale of the challenge. Estimates from the Office for Budget Responsibility (OBR) show that state pension payments will amount to 5.1pc of GDP this year, up from 3.6pc two decades ago. That bill will keep on mounting, rising to almost 8pc by the 2070s. Overall spending on pensioners, including the state pension, housing benefit and winter fuel payments but not counting healthcare costs, came to £150.7bn last year and will rise to £181.8bn by the end of the decade, according to the OBR. The Government has sought to limit the increase by restricting the share of pensioners who receive winter fuel payments. However, it was forced into a partial about-turn after a backlash from voters and Labour's own backbench MPs, showing the difficulties of reining in benefits spending. It means there is increasing pressure from the public finances to find ways to save money for the long term, potentially including further increases in the pension age. The Institute for Fiscal Studies estimates that raising the pension age by one year saves the Government around £6bn per year. Nigel Farage, leader of Reform UK, last week said the state of the public purse means the pension age should be increased more rapidly, in line with life expectancy. 'I don't think we can really afford to [wait to the 2040s], to be frank,' Mr Farage said. 'If there is a sudden economic miracle, then it might change that. But it does not look to be happening any time soon.' The International Monetary Fund last week said that if the Government stuck to its promise not to raise taxes on 'working people', then it would have to consider reining in spending, 'to align better the scope of public services with available resources'. 'In particular, the triple lock could be replaced with a policy of indexing the state pension to the cost of living,' the global economic watchdog said.
Daily Mail
22-07-2025
- Business
- Daily Mail
A tenth of families paying inheritance tax hit with £500K-plus bills
More families are being stung by inheritance tax , with nearly one in 10 of those paying the levy now being handed a bill of more than half a million pounds. A Freedom of Information request by Rathbones shows that 2,520 estates paid more than £500,000 in IHT in the 2021-22 tax year, a 29 per cent increase over three years. Of the nearly 30,000 estates eligible for the death tax, 1,630 paid between £500,000 and £999,999 in IHT, while a further 890 estates paid over £1million. If the current trajectory continues, over 3,524 estates will pay more than £500,000 in IHT by the end of the current tax year, based on an average increase of 8.74 per cent a year, according to Rathbones. Frozen thresholds combined with rising asset prices, including the value of homes, investments and savings, are already dragging more into death duties. Who pays inheritance tax? Currently, your estate needs to be worth more than £325,000 for your loved ones to have to stump up inheritance tax. This can be doubled to £650,000, jointly, for married couples or civil partners who have not already used up any of their individual allowances. A further crucial allowance, the residence nil rate band, increases the threshold by £175,000 each for those who leave their home to direct descendants, their children, grandchildren or great-grandchildren. Of these, 7,270 paid between £100,000 and £249,000, but the majority of estates paid up between £0 and £100,000. Rebecca Williams, divisional lead of financial planning at Rathbones said: 'The deep freeze on both the main nil-rate band and the residence nil-rate band, unchanged since 2009 and 2017 respectively, has led to a creeping form of fiscal drag. 'As house prices and asset values have steadily risen, more estates are being brought into the IHT net simply because the thresholds haven't kept pace with inflation . 'Without proactive steps, more estates will find themselves facing IHT bills they might not have anticipated.' There are growing concerns that the Chancellor could make further changes to IHT, including extending the seven-year gifting rule to ten years, which could drag more people into the tax net. Currently, no tax is due on any gifts you give if you then live for another seven years.
Daily Mail
22-07-2025
- Business
- Daily Mail
Nearly 1 in 10 inheritance tax-paying families handed a half a MILLION pound bill
More families are being stung by inheritance tax, with nearly one in 10 of those paying the levy now being handed a bill of more than half a million pounds. A Freedom of Information request by Rathbones shows that 2,520 estates paid more than £500,000 in IHT in the 2021-22 tax year, a 29 per cent increase over three years. Of the nearly 30,000 estates eligible for the death tax, 1,630 paid between £500,000 and £999,999 in IHT, while a further 890 estates paid over £1million. If the current trajectory continues, over 3,524 estates will pay more than £500,000 in IHT by the end of the current tax year, based on an average increase of 8.74 per cent a year, according to Rathbones. Frozen thresholds combined with rising asset prices, including the value of homes, investments and savings, are already dragging more into death duties. The number of families affected is only set to rise as pensions are brought within the IHT scope from April 2027 and especially if thresholds remain frozen. Who pays inheritance tax? Currently, your estate needs to be worth more than £325,000 for your loved ones to have to stump up inheritance tax. This can be doubled to £650,000, jointly, for married couples or civil partners who have not already used up any of their individual allowances. A further crucial allowance, the residence nil rate band, increases the threshold by £175,000 each for those who leave their home to their children, grandchildren or great-grandchildren. This gives a total potential boost of £350,000 and creates a potential maximum joint inheritance tax-free total of £1million. In 2021-22, approximately 39 per cent of estates with an IHT liability paid between £100,000 and £499,999. Of these, 7,270 paid between £100,000 and £249,000, but the majority of estates paid up between £0 and £100,000. Rebecca Williams, divisional lead of financial planning at Rathbones said: 'The deep freeze on both the main nil-rate band and the residence nil-rate band, unchanged since 2009 and 2017 respectively, has led to a creeping form of fiscal drag. 'As house prices and asset values have steadily risen, more estates are being brought into the IHT net simply because the thresholds haven't kept pace with inflation. 'Without proactive steps, more estates will find themselves facing IHT bills they might not have anticipated.' There are growing concerns that the Chancellor could make further changes to IHT, including extending the seven-year gifting rule to ten years, which could drag more people into the tax net. Currently, no tax is due on any gifts you give if you then live for another seven years.
