Business panel: Will I have to work until 70 before I can retire?
Sean Gillease, business development manager, Sovereign Trust (Channel Islands) Ltd, replies:
FROM 2020, the age at which you can start to receive benefit from the States old age pension will increase. Anyone born after 1 March 1979 will now only be eligible to receive benefits when they are aged 70 – this is an increase from age 65 as applies to anyone born before 1 January 1955. For anyone born between these dates, the age increases on a tiered basis with 70 the current maximum.
In order to qualify for the full entitlement, currently £217.36 per week, you must have made an average of 50 weekly social security contributions per year over a 45-year period.
So in theory if you commenced full time employment at age 20 and worked full time without any significant break, from age 65 you would qualify for a full States old age pension – however this would only become payable when you attained the relevant entitlement age based on your date of birth, in your case this would be age 70.
This does not mean that you must continue working until age 70, as if you have alternative sources of income you can choose to retire earlier, but you would still not receive your States old age pension until age 70.
Using the example above, if you had commenced full time employment at the age of 20 and worked full time until the age of 65, you could retire from full time employment at age 65 and use other sources of income to provide for you in your retirement. This would be supplemented by the States old age pension five years later when you reach age 70.
Some people downsize property and use the surplus to fund their income requirements, others have savings and some may have inherited monies and utilise these funds to retire earlier.
Another option is to set up a private pension scheme, either organising your own personal pension scheme or joining your employer’s pension scheme, if they offer one. If they don’t, under the upcoming secondary pensions system they will be required to and so this will be an option available to you in the coming years.
The current minimum retirement age from a private pension is age 50 and so this can be a useful way to provide a regular income until such time as you become eligible for the States old age pension.
