Three teams ‘particularly hit hard’ by state pension change this month
Starting this month, a major rule change will be phased in until 2028
State pension age will begin it’s phased transition to 67 this month(Image: GETTY)
From April, a number of new measures, rules and rate changes will affect state pension payments. Experts are calling on the Government to take action as they warn it could ‘feel like a punishment’ for those currently under the state pension age and may push more people into poverty.
The state pension age is rising from 66 to 67 but rather than a sudden rule change the Department for Work and Pensions is phasing this rise in over the next two years, starting this April. People who are currently 65 will likely each have different state pension ages depending on their exact date of birth as the rollout begins.
The Centre for Ageing Better has warned three specific types of people will likely be “particularly hit hard” based on the aftermath of previous state pension age increases. This includes people who are single, renting their home and those with lower education levels.
These groups tend to have higher monthly costs or have earned a lower income, that usually means they haven’t been able to save as much as their peers or contribute as much to personal pensions that could bridge the extra year wait they face due to the state pension age rise.
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.
“Labour market participation declines sharply after 60 and by 66, fewer than one in three people are still in work. 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.
“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 charity explained that many people don’t work right up until they reach state pension age, with barriers like deteriorating health, family and perceptions in the job market often becoming a major issue in later years.
It warned the government that the age rise could risk poverty for 100,000 people about to enter pension age. 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 said: “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. To many on the cusp of state pension age, the increases feel more like a punishment than a logical policy.”
State pension age is the earliest people can access their state pension. It will be increasing to 67 between 2026 and 2028, with another increase anticipated around 2044 and 2046. The state pension age rises in order to stay on par with increases in life expectancy in the UK to try ensure each generation is spending the same proportion of their life in retirement.
