Ageing Better welcomes parliamentary report calling for urgent support to limit financial damage from state pension age rise

The newly published Transition to State Pension Age report is calling on the government to increase the amount of Universal Credit people aged 66 can receive to avert the prospect that the ongoing increase of state pension age causes a sharp rise in poverty among older people waiting to claim.

The committee is calling on the government to consult on the change with a view to implementing it by the end of the year as a temporary measure.

The state pension age is currently being increased to 67 in a process which will run until April 2028.

During the last state pension age increase to 66 between 2018 and 2020, analysis we carried out, with the independent economics research institute the IFS, revealed that poverty more than doubled among people in the year approaching it which put 100,000 below the poverty line.

The committee has agreed with our assessment, given during an oral evidence session in December, that the impact of this state pension age is likely to be even greater with people forced to wait a year longer, with employment rates even lower at 66 and with a growing ageing population.

The state pension age increase will mean that some 66-year-olds will have to rely on the standard rate of Universal Credit for longer, rather than Pension Credit, which is more than twice as much.

This will leave many on the cusp of state pension age, particularly those with health issues, caring responsibilities or long histories in labour-intensive jobs, potentially struggling to make ends meet or dipping into savings set aside for retirement.

Giving further support through Universal Credit to 66-year-olds would cost the government just £600 million – a tiny fraction of the £10.5 billion savings the Treasury anticipates will be made from the state pension age rise.

The committee report also raised concerns about evidence-based policymaking within the department, finding limited evidence on the effectiveness of support programmes in helping people work longer.

The Centre for Ageing Better has long called for robust evidence gathering and evaluation for people aged 50 and over, whose poorer employment outcomes are too often accepted rather than examined. We are calling for the systematic measurement of outcomes for this age group across all mainstream employment and health programmes, alongside more tailored support designed to address their specific barriers to work.

Dr Barry continues, “For millions of people, the years before state pension age are full of uncertainty and worry, where poor health, caring responsibilities, barriers to working, and lifelong inequalities, can throw out long-held dreams of a financially secure retirement.

“Poverty peaks just before state pension age and the previous increase of the state pension age to 66, doubled poverty levels amongst those on the cusp of that age.

“The committee has warned that this time, the poverty increases could be even bigger.

“The government should have been prepared for this, but it is still not too late to remedy it, as the committee makes clear.

“It is vital the government protects individuals affected by the current ongoing state pension age rise by introducing urgent, targeted measures.

“We suggested a range of potential measures to the committee and wholeheartedly support their call to increase Universal Credit for 66-year-olds to prevent hardship.

“Giving further support through Universal Credit to 66-year-olds would cost just £600 million, a tiny fraction of the £10.5 billion worth of savings the Treasury expects will be made from the state pension rise.

“What is being proposed by the committee is a short-term measure to alleviate the current issue.

“In the longer-term, and well before any future state pension rises, we need the government to take a joined-up approach across pensions, work, benefits, and health, to ensure that the mid-60s is not a period of heightened financial precarity for growing numbers of older people.

“This will require ensuring that ongoing reforms to employment and skills support are designed with the needs of older people in mind, alongside enhanced careers guidance and financial planning advice for older workers, and stronger support for those living with health conditions.

“At present, too many people are left to sink or swim by themselves as they approach state pension age.”

Debbie Abrahams MP continues, “We should recognise that pre-pensioners have greater needs and greater barriers into employment due to ill-health, age discrimination, lack of opportunity to upskill. More than half of people are not in paid work in their mid-60s, and they’re not likely to get it if they’ve been effectively written off.

“Additional social security payments are essential in reducing the compounding effects of the lottery of life and the state pension age increase.”