This month’s rise in state pension age will undoubtedly cause poverty levels to rise
The Centre for Ageing Better is highlighting concerns about the impact of this month’s rise in state pension age to 67.
We are warning that the rise, which begins next week, could consign around 100,000 people on the cusp of pension age into poverty.
The state pension age for men and women is increasing to 67 starting from next week in a phased process that will run until 2028.
The Pensions Act 2014 brought the increase in the State Pension age from 66 to 67 forward by eight years, meaning people affected have had less time to prepare for the change.
The rise in state pension age to 68 is currently scheduled to begin in 2044 but a government review is currently underway which could bring that date forward into the 2030s.
The Centre for Ageing Better is calling on the government to urgently offer additional financial support to those forced to wait another year before they can claim state pension.
We are warning that the continued raising of the state pension age is incompatible with the government’s resistance to offering targeted support to overcome well-established barriers to employment which force many people in their 50s and 60s out of the labour market before they want to leave.
Ageing Better is calling on the government to find a comparative level of investment to support 50+ workers as it has for the Youth Guarantee.
Elaine Smith, Head of Employment and Skills at the Centre for Ageing Better, said:
While raising state pension age has considerable financial benefits for the Treasury to the tune of £10 billion, it also has negative real life consequences for people in their 60s.
“The last time the state pension increased to 66, poverty for 65-year-olds doubled. Those who were particularly hit hard included single people, renters, and those with lower education.
“The rise to 67 is likely to have larger effects, especially for groups with low private pension provision, so we are likely to see sharp increases in pre-pension poverty and greater reliance on working-age benefits.
“The reality is that state pension age increases deepen inequality among the age group impacted. They have little positive impact on those already out of work, who are the significant majority. Working up to state pension age is not the norm.
“Labour market participation declines sharply after 60 and by 66, fewer than one in three people are still in work. Ill-health, age discrimination, and caring responsibilities all limit the ability for people to stay in work until state pension age, with women, low-income groups, and people with disabilities most affected.
“The result is that many are financially struggling in their 60s, the 60-64 age group has the highest rates of poverty of any adult age group after 25; meaning they are left waiting for the lifeline of a state pension. And now they will have to hold on a year longer. They are suffering the consequences of the lack of coordinated thinking across government policy.
“People are being asked by their government to work for longer before they can access their state pension, but without any additional help from their government to help them to do this.
“We need to see government take a more joined up approach across pensions, work, benefits and health and providing greater assistance that so people in their 50s and 60s can overcome the barriers that are currently keeping them out of employment later in life.
“Having seen this increase in poverty occur the last time the state pension age was raised, the government should be active to stop it happening again. The government should take steps to protect the individuals directly affected by this increase.
“This support could be allowing those forced to wait another 12 months for their state pension to access Pension Credit early, or with a dedicated element in Universal Credit. The costs of doing this are modest compared to the huge fiscal savings the government stands to save of more than £10 billion from increasing the state pension age to 67 from next month.
“Alongside immediate financial support to help those most directly impacted by the increasing of state pension age, we need more government engagement in supporting the 50+ workforce.
“Our proposals include using just a small proportion of the money the government saves from increasing the state pension age on targeted age-focused employment support to help ensure many more older people can stay in work until that extended state pension age, or for as long as they need.
“Using just 1% of this windfall could help support more than 35,000 people aged 50 and above away from the threat of long-term unemployment and into work.
“We are also calling on the government and employers to build on the Keep Britain Working review to tackle age-health challenges, including adapt solutions for smaller businesses, provide specific focus on those furthest from work, co-design interventions with employees, and align labour market policies with public services.
“The rationale for repeatedly raising the state pension age is based on the fact that we are living longer.
“But life expectancy nationally is lower now than it was before the pandemic. And healthy life expectancy has dropped to the lowest levels in the UK since records began 15 years ago, impacting people’s ability to work through their 60s.
“So the conditions for further increases in state pension age are no longer being met. To many on the cusp of state pension age, the increases feel more like a punishment than a logical policy.”