A cross-party committee of MPs has urged Labour Party figure Andy Burnham to increase Universal Credit payments for 66-year-olds by £606 to match Pension Credit levels, as the state pension age rises to 67 by April 2028. The Work and Pensions Committee warned that many pensioners risk financial hardship due to the widening gap between Universal Credit and Pension Credit.
Financial Gap Highlights Urgent Need
Currently, the standard Universal Credit payment is approximately £425 per month, whereas Pension Credit guarantees an income of around £1,031 per month once a person reaches state pension age. The proposed £606 hike would equalise the two benefits for 66-year-olds, a group caught in the transition as the state pension age increases.
Committee Chair Debbie Abrahams emphasised that individuals should not be forced to choose between continuing to work in poor health or living in poverty while awaiting their state pension. She stated: “We should recognise that pre-pensioners have greater needs and greater barriers into employment due to ill-health, age discrimination and a 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.”
Impact on Vulnerable Groups
MPs noted that the financial gap disproportionately affects people with poor health, caring responsibilities, and those who have spent years in physically demanding jobs. The Committee called for immediate Government action to prevent poverty among this age group. Abrahams added: “It’s not too late. If the Government takes action quickly, those who face poverty because they deplete their savings before reaching pension age can be helped.”
Dr Andrea Barry, Deputy Director for Work at the Centre for Ageing Better, welcomed the report. She said: “We really welcome the Committee’s excellent report and hope it causes the Government to step up and take urgent action to tackle an entirely foreseeable increase in poverty caused by another rise in the State Pension age.”
Cost and Savings
Providing additional support through Universal Credit would cost £600 million, a fraction of the £10.5 billion the Treasury expects to save from the state pension age increase. Barry stressed: “What is being proposed by the Committee is a short-term measure to alleviate the immediate issue. In the longer term, and well before any future increases in the State Pension age, the Government needs to take a joined-up approach across pensions, work, benefits and health.”
She highlighted that poverty peaks just before state pension age, and the previous increase to 66 doubled poverty levels among those approaching that age. The current rise to 67 could exacerbate the problem further.
Long-Term Reforms Needed
Barry called for employment and skills reforms tailored to older people, improved careers guidance, financial planning advice for older workers, and stronger support for those with health conditions. “At present, too many people are being left to sink or swim as they approach State Pension age,” she concluded.
