The Department for Work and Pensions is implementing a significant change to the state pension age, raising it to 68, which could cost younger generations tens of thousands of pounds. According to new analysis by Rathbones, Gen Z individuals could lose up to £69,900 in state pension income due to this adjustment.
Impact on Different Age Groups
Rathbones estimated that someone aged 25 today could miss out on two years of state pension payments, worth approximately £69,900, if the state pension age reaches 68 instead of remaining at 66. Meanwhile, a 45-year-old could forgo about £42,700 under the same scenario.
These figures are based on the new full state pension of £12,548 per year, uprated by 2.5% annually under the triple lock system.
Expert Commentary
Ed Wood, financial planning director at Rathbones, described the change as the "elephant in the room" for younger generations. He stated: "The elephant in the room for younger generations is that they are likely to face a less generous state pension system than many retirees enjoy today, pushing the bar much higher for what they need to save themselves."
Wood added: "Many young adults we’ve come across ask for retirement modelling for worst case scenario of no state pension. With people living longer and public finances under strain, serious questions are being asked about the long term affordability of the triple lock – with the Institute for Fiscal Studies warning it could cost up to £40 billion a year by 2050."
He concluded: "That means the onus is increasingly falling on individuals to build a robust retirement pot themselves."
Advice for Savers
Rebecca Williams, financial planning lead at Rathbones, offered guidance: "People often ask us if there’s a single ‘right’ number to aim for when saving for retirement. There isn’t, but age matters enormously. Inflation quietly erodes even large sums over time, and for younger generations that challenge is compounded by high housing costs, student debt and the cost of living – making it harder to save early, when every pound has the greatest impact."
She emphasized: "Starting early, saving consistently and making the most of workplace pensions and employer contributions can make a powerful difference over time."
