How did increasing the state pension age from 65 to 66 affect household incomes?
This report, funded by Ageing Better, examines the impact of increasing the state pension age from 65 to 66 on household incomes, poverty and public finances.
With rising life expectancy and an ageing population, there are pressures on the financial sustainability of providing state pensions in the UK: the number of people of pensionable age is projected to reach over 15.2 million by 2045, a 28% increase on the level in 2020.
Not only is this analysis important for evaluating this previous increase in the state pension age, but it's also useful for assessing the potential effects of future increases.
Key findings include:
- The biggest impact on incomes of the increase in the state pension age from 65 to 66 is simply that 65-year-olds lost – on average – state pension income worth around £142 per week in 2020-21.
- Accounting for all forms of income, including state pensions, earnings, other benefits, private pensions and investment incomes, the increase in the state pension age pushed down the net income of 65-year-olds by an average of £108 per week.
- For some groups, the increase in the state pension age from 65 to 66 caused absolute income poverty rates among 65-year-olds to rise by much more.