State pensioners are set to lose three months of state pension payments due to the Department for Work and Pensions (DWP) changing the state pension age. Under a new timetable, the state pension age will rise from 66 to 67. The change began on April 6 and is scheduled to be completed by 2028.
Impact on Those Turning 66
Previously, individuals could claim the state pension from age 66. However, those who turn 66 between June 6 and July 5 will now become eligible at 66 years and 3 months old. This rule change means losing three months' worth of state pension, equivalent to £965 per month or £2,895 at the full rate.
Institute for Fiscal Studies Analysis
The Institute for Fiscal Studies (IFS) commented on the implications: "Previous increases in the State Pension age (SPA) have been shown to cause some people to delay retirement and stay in paid work for longer. Employment rates of affected age groups have increased by about 10 percentage points in response to previous increases in the SPA. This effect is fully driven by people staying in their existing jobs for longer, rather than moving to a new job or re-entering paid employment after leaving the labour market."
However, the IFS noted that only a minority of those affected respond by working longer, so these increases only partially offset the direct loss of income. Previous research shows average incomes are markedly lower among affected individuals, as they have to wait longer to receive their state pension. Lower household incomes also lead to an increase in income poverty. For example, as the SPA increased from 65 to 66, the income poverty rate of 65-year-olds rose from 10% to 24%, with effects concentrated among those out of paid work.
DWP State Pension Age Rise Timetable
- Born between April 6, 1960, and May 5, 1960: Reach State Pension age at 66 years and 1 month
- Born between May 6, 1960 – June 5, 1960: Reach State Pension age at 66 years and 2 months
- Born between June 6, 1960 – July 5, 1960: Reach State Pension age at 66 years and 3 months
- Born between July 6, 1960 – August 5, 1960: Reach State Pension age at 66 years and 4 months
- Born between August 6, 1960 – September 5, 1960: Reach State Pension age at 66 years and 5 months
- Born between September 6, 1960 – October 5, 1960: Reach State Pension age at 66 years and 6 months
- Born between October 6, 1960 – November 5, 1960: Reach State Pension age at 66 years and 7 months
- Born between November 6, 1960 – December 5, 1960: Reach State Pension age at 66 years and 8 months
- Born between December 6, 1960 – January 5, 1961: Reach State Pension age at 66 years and 9 months
- Born between January 6, 1961 – February 5, 1961: Reach State Pension age at 66 years and 10 months
- Born between February 6, 1961 – March 5, 1961: Reach State Pension age at 66 years and 11 months
- Born between March 6, 1961 – April 5, 1977: Reach State Pension age at 67
The phased increase means many will need to plan for a later retirement or adjust their finances accordingly.
