As the State Pension age continues to rise, experts and MPs have urged Labour leader Andy Burnham and the government to increase Universal Credit payments for claimants aged 66. The Department for Work and Pensions (DWP) is set to raise the State Pension age to 67 by April 2028, prompting concerns about financial hardship among pensioners during this transitional period.
A cross-party group of MPs has highlighted the significant disparity between the current standard Universal Credit payment, which averages around £425 per month, and Pension Credit, which guarantees approximately £1,031 per month for those who have reached State Pension age. To bridge this gap, a proposed increase of £606 in Universal Credit for 66-year-olds has been suggested.
MPs warn that this financial shortfall disproportionately impacts individuals facing health challenges, those with caring responsibilities, and people who have spent much of their working lives in physically demanding roles.
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Debbie Abrahams, Chair of the Work and Pensions Committee, emphasised the difficulties faced by pre-pensioners, stating, “People should not have to choose between continuing to work while in poor health or living in poverty while waiting for their State Pension. We must recognise the greater needs and barriers faced by this group, including ill-health, age discrimination, and lack of opportunities to retrain.”
“More than half of people in their mid-60s are not in paid work, and many find it challenging to re-enter the labour market after being effectively written off,” Ms Abrahams added.
She further noted optimism for policy change, saying, “It’s not too late for the Government to act swiftly and support those who risk poverty by depleting their savings before reaching the pension age.”
In response to the Committee’s report, Dr Andrea Barry, Deputy Director for Work at the Centre for Ageing Better, expressed strong support, commenting, “We welcome the Committee’s excellent report and urge the Government to take rapid action to address the predictable rise in poverty linked to the increasing State Pension age.”
Dr Barry highlighted the challenges many face in their 60s, including poor health, caring duties, obstacles in employment, and lifelong inequalities, which often derail plans for a financially secure retirement. She added, “Poverty peaks just before State Pension age, and the previous increase to 66 saw poverty levels in this group double. The Committee warns that the upcoming rise to 67 may result in an even greater increase.”
She advocated that although the Government should have anticipated this issue earlier, it remains feasible to mitigate the problem by introducing targeted support, notably through increased Universal Credit payments for 66-year-olds. This measure is estimated to cost £600 million-a relatively small portion of the £10.5 billion the Treasury expects to save from raising the State Pension age.
Dr Barry concluded by stressing the need for a comprehensive approach: “While short-term support is critical, the Government must also implement coordinated reforms across pensions, employment, benefits, and healthcare. This includes improved skills training, career guidance, financial planning for older workers, and enhanced support for those with health conditions to prevent the mid-60s becoming a period of acute financial insecurity.”
She warned, “Currently, too many individuals are left to navigate these challenges alone as they approach State Pension age.”