Research and reports
The UK retirement age can refer to the age at which you can access the state pension and a free bus pass. But there’s a different, lower age to keep in mind when accessing workplace or personal pensions.
If you’re self-employed, you might have workplace pensions if you’ve been employed before.
And as there’s no pension auto-enrolment for the self-employed, you might instead be saving for retirement using a personal pension.
The UK no longer has a default state retirement age. The law was changed in 2011 to stop employers forcing people to retire at 65. You can continue working for as long as you want (or need) to.
Instead, there are pension ages, at which you can access a pension – including the state pension and other pensions you might have.
The average retirement age in the UK is 65 years old for men, while women leave work at an average of 64 years old, according to government figures from 2021.
The state pension has changed in recent years. It now largely depends on when you were born and whether you’re male or female – it can be between 61 and 68.
Due to the changes, lots of younger people will have to wait until they’re in their late sixties before they can start claiming a state pension.
The reason for the increase in state pension age is changing life expectancy. You don’t have to stop working when you reach state pension age.
Gov.uk has a state pension age calculator that you can use to work out your state pension age. All you need to do is enter your date of birth and it will tell you when you start claiming.
It used to be that the retirement age for women, at which they could get the state pension, was 60.
It’s currently set at 66 for women, rising to 67 by the end of 2028 for anyone born on or after 5 April 1960.
The men’s retirement age in the UK, when they could start claiming a state pension, used to be 65.
It’s currently set at 66 for men, rising to 67 by the end of 2028 for anyone born on or after 5 April 1960.
The state pension age for both men and women is due to rise to 68 between 2044 and 2046 for anyone born on or after 5 April 1977. However, it could be reviewed and brought forward after the next general election.
The full state pension amount is £203.85 a week.
Whether or not you get the full amount will depend on the number of years you’ve made National Insurance contributions. If you’ve paid National Insurance for anything less than 35 years, you might not receive the full state pension.
Meanwhile, the basic state pension amount (for those who reached state pension age before 2016) is £156.20.
The state pension amount usually increases every year. The annual rise is 2.5 per cent. It could be higher if either annual wage growth or price growth (measured by the Consumer Price Index) exceed 2.5 per cent.
This is known as the ‘triple lock’. Introduced in 2010, the triple lock is designed to make sure that the value of the state pension doesn’t decrease in real terms.
The triple lock was suspended after the Covid-19 pandemic due to distorted wage growth. It’s since been reinstated but could be reviewed again in the future.
Under ‘pension freedom’ rules introduced by the government in 2015, you have more flexibility about how you access ‘defined contribution’ pensions when you reach 55 (increasing to 57 in 2028). This age is when you can access your personal pensions without getting an unauthorised payment tax charge.
Most modern workplace and personal pensions are defined contribution schemes, with the pension’s value determined by the money contributed, as well as investment performance over time.
When you reach this age, you can take 25 per cent of your pension tax-free, either as a lump sum or in separate smaller amounts. Then you can use the rest as you like – either by making more withdrawals (and paying income tax) or by buying an annuity.
An annuity is a product that gives you a guaranteed income for the rest of your life, depending on the size of your pension as well as other factors (like your age and health).
These pension freedom rules mean that it’s possible to access your pension while you’re still working.
The retirement ages above are when you can access pensions – but if you want to ‘retire’, or simply stop working, there’s no set age.
For many people though, retiring means being able to stop working while still being financially secure, and a pension gives you that security.
It’s important that self-employed people think about when they’d like to retire. Having a particular age in mind is one of the first steps in retirement planning. That’s because if you’re 40 and you know you’d like to retire at 60, you can figure out how much to save for retirement.
The earlier you start saving the better, as you won’t need to contribute as much into your pension each month if you start earlier.
It’s worth taking professional retirement advice to help you understand your options.
While some company owners may be able to sell their business to help fund retirement (this needs a detailed exit strategy), many self-employed people are their business. So, when they retire, the business likely won’t have much value.
It’s therefore important to use a pension, although self-employed people often find it difficult to save. According to IPSE, only 31 per cent of self-employed people are saving into a pension.
But paying into a pension gives you generous tax relief on your contributions, usually up to £40,000 a year. If you’re a basic-rate taxpayer, this means you’ll get an extra £25 for every £100 you pay in.
For higher-rate taxpayers, you can claim back a further £25 for every £100 you pay in when you come to do your tax return.
The government has made pension planning more of a priority in recent years. Here are some websites you can use to get free pension guidance:
You can also read our guide to self-employed pensions for more information about the different pensions available to self-employed people.
With Simply Business you can build a single self employed insurance policy combining the covers that are relevant to you. Whether it's public liability insurance, professional indemnity or whatever else you need, we'll run you a quick quote online, and let you decide if we're a good fit.Start your quote
Sam has more than 10 years of experience in writing for financial services. He specialises in illuminating complicated topics, from IR35 to ISAs, and identifying emerging trends that audiences want to know about. Sam spent five years at Simply Business, where he was Senior Copywriter.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2023 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.