Potential State Pension Age Hike Could Cost Millions Thousands
A potential Department for Work and Pensions (DWP) rule change under the Labour government could cost claimants £12,500 each. Around five million people aged between 49 and 55 could lose approximately £12,500 if the Government brings forward the increase in the State Pension age to 68.
The higher age is currently due to be phased in between April 2044 and April 2046, affecting people born between April 1977 and April 1978. However, Treasury officials have told the Office for Budget Responsibility that "current policy" is to introduce the change at least seven years earlier, from 2037.
Government Confirms Earlier Timeline
The OBR said: "The Treasury has confirmed to us that this is the Government's current policy position, rather than the legislated increase set in the Pensions Act 2007." A new review of the state pension age was launched by Labour last year under the legal requirement that one must be carried out every six years.
The review is being led by Dr Suzy Morrissey, deputy director of the Pensions Policy Institute, and the Government Actuary’s Department. Now that he is Prime Minister, with Parliament set to end in 2029 and any state pension age needing 10 years notice, it could theoretically fall on new Prime Minister Andy Burnham to announce the change.
Experts Warn of Retirement Planning Gap
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said: "Working later in life can offer real financial and social benefits, particularly when it reflects personal choice. Yet for many people, this isn't a lifestyle decision but a financial necessity. Millions across the UK are unable to retire when they want, underlining the challenge of retirement adequacy and the need for longer working lives just to bridge the gap."
Des Cooney, Retirement Planning Specialist at Axis Financial Consultants, said: "A faster-than-expected rise in the state pension age leaves a dangerous planning gap for people who've built their retirement timeline around the current thresholds. Anyone now in their late 40s or early 50s should urgently review whether their private pension or ISA savings can realistically bridge several additional years without state support. Waiting until closer to retirement to address that shortfall significantly narrows your options — the earlier you stress-test your income plan, the more flexibility you retain."
Calls for Support for Vulnerable Retirees
Ms Foot added: "To make working in later life as accessible as possible, we need expanded, age-tailored careers support, alongside better flexible work arrangements and improved access to in-work health support." She said: "The Government must set out a clear plan to ensure the most vulnerable are supported before and during retirement, mitigating the negative impact of further changes to the State Pension age on their financial security."
