Pensioners in the UK are facing another potential blow as experts warn that the state pension age could rise sooner than expected. Currently set at 66, the state pension age is already scheduled to increase to 67 between 2026 and 2028, and then to 68 between 2044 and 2046.
However, there are growing concerns that the Labour government might accelerate this timeline, potentially raising the retirement age to 68 as early as the 2030s. Such a move could save the Treasury an estimated £6 billion annually but would have significant implications for millions of workers nearing retirement.
Lexi Burgess, a personal finance expert at CredAbility, highlighted the potential challenges this change could bring. She noted that 32% of people over 50 have no pension savings beyond the state pension, which currently falls short of the £14,400 annual income needed for a minimum standard of living. Burgess warned that accelerating the state pension age increase could force many older individuals to delay retirement or return to work, despite issues like declining health or age discrimination in the workplace. This could also have a ripple effect on families, as older relatives may no longer be able to provide childcare support for younger generations.
The potential change comes amid broader concerns about retirement security in the UK. A report by the Institute for Fiscal Studies (IFS) and pension provider Abrdn revealed that certain groups, such as those who rent privately, are particularly at risk of falling below the poverty line in retirement. The report suggested that the government could provide additional support to those nearing retirement age who are on universal credit, which would cost £600 million annually and help reduce poverty in around 30,000 households. A more targeted approach, focusing on those receiving both universal credit and health-related benefits, would cost £200 million a year and assist 3,000 households.
The prospect of an earlier increase to the state pension age has sparked debate about the financial pressures facing both individuals and the government. While the move could alleviate some of the strain on public finances, it raises questions about the adequacy of retirement planning and support for older workers. Burgess urged individuals to take proactive steps to secure their financial future, such as exploring private pensions, maximizing workplace contributions, and seeking professional financial advice.
The Department for Work and Pensions has not yet commented on the possibility of accelerating the state pension age increase. However, the discussion underscores the need for a balanced approach that considers both the economic realities and the well-being of those approaching retirement. As the debate continues, many will be watching closely to see how the government addresses this complex and sensitive issue.
