The Department for Work and Pensions (DWP) is implementing a state pension rule change that could leave retirees born before 1977 up to £16,500 worse off. Under current Labour government rules, the state pension can be claimed at age 66. However, a pre-planned DWP timetable is gradually raising the age to 67 by April 2028, and now the increase to 68 is being fast-tracked.
Fast-tracked pension age rise
Originally, the state pension age was set to rise to 68 between 2044 and 2046. But HM Treasury plans released this week have accelerated that timeline. The Office for Budget Responsibility (OBR) stated that the Government's current policy is to raise the state pension age to 68 between 2037 and 2039 — seven years earlier than previously planned. It is also expected that the state pension age will rise to 69 between 2073 and 2075.
Impact on those born before 1977
This change means approximately five million people aged between 49 and 55, all born before 1977, will be forced to wait an extra year before claiming their state pension. According to Hargreaves Lansdown, they would be £12,500 out of pocket in today's money. If the state pension grows by the minimum 2.5 per cent over the next 11 years, the loss could amount to around £16,500.
Expert reactions
Dr Carole Easton, chief executive of the Centre for Ageing Better, described the move as extremely worrying. She said: "For too many people, their 60s is a time of huge financial stress, living in desperate hope they have sufficient resources to last out until state pension age. The Government should not be looking to extend this suffering."
Andrew Oxlade from Fidelity urged future state pensioners to take proactive steps. He advised: "If retirement is a way off, you still have time to take control of your own pension age. Time is a powerful weapon and the single biggest factor that determines the growth of your money - the longer, the better, although of course there are no guarantees." He recommended starting with a company pension, as many employers will match or part-match contributions, and highlighted the tax benefits of pensions, noting that contributions usually benefit from generous tax relief.
