Retirement age in the UK: When can you retire and get your state pension?

What is the retirement age in the UK? According to the UK government, there is no UK retirement age or default retirement age (forced retirement age). This is because the default retirement age of 65 no longer applies. You can work as long as you can and decide when to retire. However, there is a ‘compulsory retirement age’ where 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 2021, the average retirement age for men is 65.1, while the average retirement age for women is 64. There has been a 0.2 – 0.3% decrease in the average age of retirement for both genders in 2021.

There have been calls for the government to increase the retirement age in the UK to 70 by 2046, to control the cost of rising state pension payments. The average retirement age in the UK has been on the increase since the mid-1900s and an increase in the retirement age will cause an increase in the average age of retirement for men and women.

However, there 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 currently 66 for both men and women. In recent years, the state pension age had seen modifications depending on when you were born. The state pension age for both men and women born after April 6 1978, is now 68. However, the pension age for those born before April 6 1970, remains 67 years. Those born between April 6, 1970, and April 5 1978, varies between 67 and one month and 68, depending on their date of birth.

So, the age when you receive your pension in the UK depends on the individual’s date of birth. The historical gender difference in state pension age was only applicable until 2018, before which the state pension age for women was 60. However, beginning November 6, 2018, both men and women were set to retire at the age of 65 and it increased to 66 in October 2020.

Changes made to the state pension age, and will it change again?

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

When the 1995 Pensions Act was passed, the pension age for women was fixed at 60. Under the 2011 Pensions Act, this was increased to 65, which then 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.

The life expectancy of humans has increased over time, from 78.5 in 1948 to about 87.8 in 2017. Therefore, it is necessary to make amendments to the pension age to keep a check on the number of people above the state pension age in the UK. The pension age for men and women may change again due to life expectancy and other economic factors.

Can you retire before the state pension age and still claim state pension?

Until April 2011, the state pension age was synonymous with the retirement age. This means that people were made to retire when they reached 65 and qualified for the state pension. This default UK retirement age 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 state pension age remains at 67 or 68, depending on your date of birth. So, even if you retire or continue working beyond the mandatory UK retirement age of 65 years, you become eligible for state pension only at the designated state pension age. You may, however, start receiving your private pensions or workplace pensions at an earlier age, depending on your scheme.

Similarly, you can take early retirement any time before the official UK retirement age. The state pension age, however, remains the same. You are not eligible to start claiming State Pension unless you reach the pension age, irrespective of whether you have retired or not. Thus, the UK retirement age and pension age are independent of each other.

Deferring your state pension

You can postpone claiming your state pension once you make it to the state pension age. If you hit state pension age and choose not to claim it, the state pension automatically gets deferred. However, you can only defer your state pension once.

If you reach the state pension age 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-weeks deferral. The weekly increase amounts to 5.8% for every 52 weeks deferral.

How much state pension will you get if you defer?

The full new state pension rate is £185.15 per week. So, with every 52 weeks deferral, you will get an extra £10.70 (5.8%) a week. The extra amount is paid with the regular state pension. If you reach state pension age 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.

With higher weekly payments, you must defer for a minimum of 5-weeks. And the pension increases by 1% every 5-weeks, which amounts to 10.4% for every 52 weeks. So, for instance, the full basic state pension rate is £141.85 per week, with a 52 weeks deferral, an extra £14.75 (10.4%) per week is added to your pension.

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 state 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 contributions. Individuals who reach state pension age after April 6, 2016, need to have at least ten years of national insurance contributions to claim the state pension.

You can check your state pension amount online, and it can be calculated using various state pension calculators to get an estimate of how much you would claim.

The government website gives a state pension amount forecast. 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. However, you can’t use the government website service if you have already started receiving your state pension or deferred claiming it.

The state pension does not get processed automatically. It needs to be claimed at least two months before you reach state pension age in the UK. The process of claiming the state pension 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 state pension is paid.

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

Bottom line

The UK retirement age or default retirement age has undergone several amendments and is expected to keep changing in the future. Ultimately, the retirement age and the state pension age do not need to be the same in the UK. You can retire early and claim your pension once you hit the state pension age, or you can continue working even after reaching your UK 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, their 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. You decide when to retire. However, the current State Pension retirement age for men and women is 66.

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

No, you have to wait until you reach your State Pension age of 66 to claim State Pension. If you retire early, you won’t be able to claim your State Pension.

What is the best age to retire for a woman?

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