UK Retirement Age: What is retirement age? When can I retire?

What is the retirement age in the UK? According to the UK government, there is no UK retirement age or default retirement age (forced age of retirement). It used to be 65, but it no longer applies. You can work as long as you can and decide, yourself, when to retire. However, there is something called the ‘compulsory retirement age’, where, in certain circumstances, an employer can enforce retirement based on jobs with a law-enforced age of retirement limits (e.g., fire service) or physical fitness limitations.

What is the average retirement age in the UK?

As of 2024, the average male retirement age in the UK is 65.1, while the average retirement age for women in the UK is 64. There has been a 0.2 – 0.3% decrease in the average retirement age for both genders since 2021.

There have been calls for the government to increase the state retirement age in the UK in terms of State Pension to 70 by 2046 to control its rising cost. The average retirement age in the UK (before it was abolished) had been on the rise since the mid-1900s, and an increase in the retirement age meant an increase in the average age of retirement for men and women.

However, there were and still are ages at which you can access your pensions, whether it be the State Pension, workplace pension or personal pension. Different minimum retirement ages are required to access the funds in these pensions.

What is the State Pension age?

The current retirement age in the UK for the State Pension is 66 for both men and women. In recent years, State Pension age (SPA) has been modified depending on when you were born.

Both the retirement age in the UK for females and the retirement age in the UK for males born after April 6, 1978, is now 68. However, the pension age for those born before April 6, 1970, remains 67 years. For people born between April 6, 1970, and April 5, 1978, the pension age varies between 67 and one month and 68, depending on their date of birth.

So, the age when you receive your State Pension in the UK depends on your date of birth. The historical gender difference was only applicable up to 2018, before which the retirement age for women in the UK in terms of State Pension, was 60. However, beginning as of November 6, 2018, both men and women were set to receive their State Pensions at the age of 65. It increased to 66 in October 2020.

If you’re unsure at what age you can apply to start receiving your State Pension, there’s a handy UK retirement age calculator on the Gov.uk website.

What are the factors that influence the UK retirement age?

The retirement age in the UK has undergone progressive changes since April 2010. As a result, the UK retirement age or State Pension age (SPA) and the amount received are regularly reviewed, at least once every five years, to ensure that the amount paid is fair and that the SPA is in accordance with average life expectancy.

When the 1995 Pensions Act was passed, the UK SPA for women was fixed at 60. Under the 2011 Pensions Act, it was increased to 65, which became 66 for both men and women. A further amendment raised it to 67 for people retiring between 2026 and 2028. Finally, age 68 was set for those retiring between 2044 and 2046, irrespective of gender.

Human life expectancy has increased over time, from 78.5 years in 1948 to 79.0 years for men and 82.9 years for women in 2022. Therefore, it was necessary to amend the SPA to keep a check on the number of people above it in the UK. The SPA for men and women may change again due to life expectancy and other economic factors, such as the state of the economy, cost of living, and availability of private pensions.

Choosing your UK retirement age is a personal choice, and there is no wrong or right age. However, economic variables could have an impact on this choice. A pension guide can help you to understand your options and make the best decision for your individual circumstances.

Can you retire before the State Pension age and still claim State State Pension?

Until April 2011, the SPA was synonymous with the UK retirement age. This meant people were made to retire when they reached 65 and qualified for the State Pension. This default age for retirement no longer exists. As laid out in an amendment made in April 2011, you can now continue to work beyond the age of 65.

However, the SPA remains at 67 or 68, depending on your date of birth. So, even if you retire or continue working beyond the 65 years of age, you become eligible for State Pension only at the designated State Pension age. However, you may start receiving your private or workplace pensions at an earlier age, depending on your scheme.

Similarly, you can decide on an early UK retirement age if you can afford to. However, the earliest age you can retire in the UK and access most personal pensions, or workplace pensions is 55 (changing to 57 in 2028). However, if you retire at 55, you will not be able to claim your State Pension. You are only eligible to start claiming it if you reach the SPA, regardless of whether you have retired. Thus, the age at which you retire, and the SPA, are independent of each other.

Raising or lowering the State Pension Age: pros and cons

The SPA debate is a complicated one with both benefits and drawbacks. There are some pros and cons to raising or lowering it.

Raising the SPA pros and advantages

• Financial burden: If the UK SPA rises, it can reduce the financial burden on the government’s pension system when the economy is poor, as people take longer to reach the State Pension age. This will save the government money.
• Adequate workers: Raising the SPA will increase the size of the workforce, boost the economy, and reduce unemployment. It ensures that there are adequate workers to support the growing number of retirees.
• Active Employment: Raising the SPA may help people stay employed and active for longer.

Raising the SPA cons and disadvantages

• Pension affordability: If the SPA is increased, people may be unable to afford to choose an early UK retirement age, as it will take longer to claim their State P Also, people may have less time to save for retirement.
• Physical and mental labour: As workers may be forced to stay in the workforce longer, a number of people may be forced to work jobs that they are not physically or intellectually capable of.
• Inequality: If the SPA rises, lower-income people may be more likely to rely on their pensions, so they may be disproportionately affected by any reductions in benefits.

Lowering SPA pros and advantages

• Longer period of retirement: If the SPA is lowered, people will have a longer time to enjoy their retirement.
• Family time: An earlier UK retirement age means retirees will be able to spend more quality time with family and friends.
• Hobbies: With early retirement, retirees will have more time to explore and pursue hobbies and interests.

Lowering the SPA cons and disadvantages

• Pension strain: Lowering the SPA means that people will be drawing on their pensions for longer as they reach the State Pension age quicker, and the government will have to pay out more pensions, putting a stain on the government’s pension system. The government may have to reduce benefits, such as the triple lock, to keep costs down.
• Worker shortage: Lowering the SPA can lead to a shortage of workers in the economy as fewer people are available to work, which reduces productivity and increases labour demands.
• Fewer quality workers: When people retire early, businesses may find it difficult to replace qualified workers, which can increase training costs.

Deferring your state pension

You can postpone claiming your State Pension once you make it to the State Pension UK retirement age. If you hit the SPA and choose not to claim it, the State Pension automatically gets deferred. However, deferring State Pension is a one-time decision; once you have deferred it, you cannot do so again.

If you reach the SPA on or after April 6, 2016, and defer your claim for at least 9 weeks, you get a weekly increase in pension. There is a 1% increase for every 9-week deferral. The weekly increase amounts to 5.8% for every 52-week deferral.

How much state pension will you get if you defer?

How much State Pension will I get at 66? The full new state pension rate is £221.20 per week, and the full basic State Pension is £169.50 per week. However, how much pension you will receive will depend on your National Insurance contributions. The full number of qualifying years will net you the full new State Pension rate of £221.20 per week. You can check your National Insurance contributions record to find out how many qualifying years you have.

If you reach the State Pension UK retirement age on or after 6 April 2016, the pension increases by 1% for every 9 weeks you defer. A 52-week deferral will increase the full new State Pension amount by 5.8%. For every 52 weeks deferral of the full new sState Pension, you will get an extra £12.82 (5.8% of £221.20) a week, which amounts to £234.02 per week.

If you reached the SPA before 6 April 2016, the State Pension increases by 1% for every 5 weeks you defer. So, you must defer for a minimum of 5 weeks for higher weekly payments. A 52-week deferral will increase your pension amount by 10.4%. For instance, the full basic State Pension with a 52-week deferral will give you an extra £17.62 (10.4% of £169.50) per week added to your pension. So, you will receive £187.12 per week.

The extra payment is paid with the regular State Pension. If you reach the SPA before April 6, 2016, the extra pension can be claimed as a one-time lump sum or as larger weekly payments. You can claim the one-time lump sum payment with 2% interest above the Bank of England base rate if the State Pension is deferred for at least 12 months.

Bear in mind that an annual increase in your State Pension may increase the extra amount paid. Therefore, if you know you will defer your pension, you must factor the extra amount from the deferral and other pensions into your retirement planning.

How to calculate and claim the State Pension

It is important to know how much you’ll receive from your pension so that you can plan your life after you retire. The amount received depends on the qualifying years of National Insurance (NI) contributions. Individuals who reach the State Pension UK retirement age after April 6, 2016, must have at least ten years of NI contributions to claim the state pension.

You can check your state pension amount online, and it can be calculated using the UK retirement age calculator mentioned earlier.

The government website gives a forecast of the state pension amount. It also provides you with information on the current triple lock, your pension credit qualifying age, when you are qualified for a free bus travel, when you will get your State Pension, and how you can increase it.

The State Pension does not get processed automatically. It needs to be claimed at least two months before you reach SPA in the UK. The process of claiming it can either be completed online, on the phone, or by downloading the State Pension claim form and sending it to your local pension centre. The last two digits on your national insurance number determine the day your pension is paid.

If you plan to continue working beyond your SPA you can still claim your pension as soon as you reach state pensionable age. You also have the option to defer claiming it. Any delay in taking it will increase the amount you receive when you claim it in the future.

A SIPP or an ISA – Which is best?

While everyone should have a pension, is that the only way to secure a satisfactory income in your retirement?

All UK residents who have accumulated sufficient NI contributions will receive a specific amount of new State Pension up to £221.20 per week. Recognising that this alone is not enough to fund most people’s retirement, workplace pensions and automatic enrolment were introduced.

For some people, even both pensions will not provide them with the income they need to sustain the lifestyles they wish to enjoy in retirement, and accordingly, they either pay more into the workplace pensions or turn to SIPPs.

The only problem with pensions, however, is that they are subject to income tax. Yes, the first 25% of your private pension pot is tax-free, but thereafter, any further income from the pot will be taxable. Depending on the size of your total income, for high earners, it means paying 40% tax and 45% if you’re in the additional taxpayer band.

If your planned UK retirement age is 55, it means you’ll probably be giving away a lot of money to the taxman. Perhaps investing in a stocks and shares ISA would be better?

All ISAs are tax wrappers. It means that as long as you stay within your personal ISA allowance, any contributions, fund growth, and withdrawals are all tax-free. But as attractive as this sounds, two important things must be considered. The first is risk.

Stocks and shares ISAs do carry a certain amount of risk. The size of your fund can fall as well as rise. You are, however, given a choice of risk levels, from low to medium and high risk. But it should also be borne in mind that SIPPs are also investments whose value can fluctuate according to the stock markets.

The other drawbacks of ISAs include the £20,000 per annum ISA allowance, and the fact that you can withdraw money as and when you please.

If you intend to use your ISA after you’ve reached your chosen UK retirement age, you need to fight the urge to make early withdrawals, as it can significantly lower the size of your final pension pot. But for some, the thought of a tax-free income outweighs the risk.

It’s very much down to the individual and is perhaps something on which you should seek independent, professional advice.

Bottom line

The UK retirement age, or default retirement age, underwent several amendments and was subsequently abolished. Ultimately, retirement age and the SPA can be different in the UK. You can retire early and claim your pension once you hit the SPA, or you can continue working even after reaching State Pension age.

It’s essential for anyone working in the UK to be fully aware of their State Pension age, the amount they’re likely to receive, pension options, and how the tax system works so that they can plan for a comfortable retirement.

FAQ

What is the retirement age in the UK?

A forced or default retirement age no longer exists in the UK. When you can retire varies based on personal circumstances and employer policies. However, the current State Pension UK retirement age for men and women is 66. If you decide to work past your SPA, you’ll continue to earn NI contributions while you work, which may help to increase your State Pension in the future.

Can I retire at 62 and get my State Pension in the UK?

No, you have to wait until you reach the State Pension age of 66 to claim It. Retiring early before you reach SPA can impact the amount of pension you receive.

What is the best age to retire for a woman?

There is no best age to retire for women, but the average female retirement age in the UK is 64.

What is the difference between a State Pension and a private pension?

The State Pension is a basic pension that the government pays. A private pension is paid to you through your employer or a personal pension plan. You can have multiple private/personal pension plans and amalgamate them into one through a pension transfer, but you can only have one State Pension.