Financial Expert Witness – Does a change in retirement dates make any difference to claim?

Good morning, 

The holidays are over for many of us and as my daughter, Fabienne (now 7) returns to school, I wipe a tear (mostly of joy, some of sadness), and turn my mind back toward the work I love. 

Those more ‘experienced’ than I, say that life will be gone in the blink of an eye and she will soon be retired!  

With that in mind, I wanted to invite you to consider what difference retirement ages make to your claims, whether you are pleading State Pension Age (normally 68 now) or longer to age 70 or 75 and look at the question of whether you have a viable position, or not. 

BIG PICTURE: 

Is a later retirement age likely to be accepted? 

Yes, dependent on age now and work ethic if older. 

What difference does retiring later make to a claim? 

Increases the loss of earnings, and often in the years when they are earning most. 

Increases their State Pension because they defer it. 

Increases the size of their new and existing pensions because in a Defined Contribution scheme, the pot will be held and invested for longer, resulting in a larger ‘pot’, larger tax-free lump sum and higher income in retirement.  

For Defined Benefit schemes, they may be enhanced considerably if late retirement factors apply. 

The claim for additional tax relief from HMRC will be greater. 

Should it be considered in a claim? 

Yes, we tend to see it claimed more if you are a Claimant Solicitor or Barrister, as it will increase the size of the loss in almost all circumstances and be a more accurate reflection of a person’s retirement and earnings expectations. 

Remember to account too for the years’ your Clamant is short of the NIC contribution levels required for a full New State Pension too, these can differ from the Basic Pension – welfare benefits can sometimes provide NIC credits but are not guaranteed – there is only one way to guarantee them. This can sometimes add around £30k to quantum. 

DETAIL: 

The Government committed to increase the State Pension Age in line with increasing longevity.  

In 2019, the State Pension age started to increase for both men and women which reached 66 in 2020. (It used to be 60 for a lady! The government avoid paying (save) £9,267 pa for at least 6 years due to this change for every female in the UK – a saving of £55,602 per female) 

The Government is planning further increases which will raise the State Pension Age from 66 to 67 between 2026 and 2028.   

The rise in the pension age to age 68 will now happen in 2039, rather than 2046 as was originally proposed. Therefore, this will affect people born between 06/04/1970 and 05/04/1978 whereby the current state pension age of 67 will increase to 68. 

It is generally accepted that the State Pension age will continue to increase, the Government Actuary assumes state pension age will be 70 in the 2050s and 71 in the 2060s. This means anyone aged 30 or below, will not get their state pension until they are aged 70 and those aged 20 or younger will have to wait until they are 71.  

The State Pension is not automatically received when a person reaches state pension age, they must claim it. On the same note, a person can choose to defer their state pension as long as they defer for a minimum of 9 weeks. Your State Pension increases by the equivalent of 1% for every 9 weeks you defer. This works out at approximately 5.8% for every year you defer (non-compounded).  

If interested, you can check your own SPA here … https://www.gov.uk/state-pension-age ….. If you know your government gateway details, you can also see how many more years of NICs you require to hit the full State Pension – it is known as a BR19 pension forecast. 

FREE VIABILITY CHECK: 

This may have ‘scared’ a few of you slightly, so If you have existing cases that you now wish to check your work on, or new cases to run by me – please email across brief details and I will let you know if viable or not. Alternatively, give me a call on the number below and we can chat through. 

Loss of Earnings – Loss of Dependency – Loss of Pensions – Lost Years – CFO Reports – Pensions in Divorce – PPO  

Wishing you a fantastic last third of the year. 

Very best wishes, Ian 

Ian MacKendrick

Ian MacKendrick

Founder of Paladin Financial Consultancy - Fellow & SOLLA Accredited Chartered Financial Planner, Expert Witness and Dementia Friend.

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