State Pension Age warning as MPs demand Universal Credit boost

The warning comes amid fears that tens of thousands of older people will be forced to drain their savings or fall into poverty while waiting an extra year to claim their State Pension.

MPs say the emergency benefits boost should be introduced before the end of this year to help bridge the growing gap between working-age benefits and the far more generous Pension Credit.

Why are MPs calling for extra support?

The Work and Pensions Committee says people caught by the latest State Pension age increase face a sharp financial cliff edge.

Someone aged 66 who has not yet reached State Pension age may have to rely on the standard Universal Credit allowance of around £425 a month, while Pension Credit can provide a guaranteed income of more than £1,000 a month for eligible pensioners.

The committee argues that many people in their mid-60s are no longer able to work because of poor health, caring responsibilities or physically demanding jobs, leaving them particularly exposed.

Poverty ‘could be even worse’ this time

The report warns that when the State Pension age previously increased to 66, poverty among people waiting to claim their pension more than doubled.

It rose from 10 per cent to 24 per cent, pushing around 100,000 people below the poverty line.

Now MPs fear the latest increase to age 67 could have an even greater impact as people are expected to wait another year before receiving their State Pension.

The committee says only around four in 10 people aged 66 are currently in paid work, while many older workers are already living with long-term health conditions.

Government accused of using outdated evidence

MPs have also criticised ministers for relying on impact assessments that are more than a decade old when making decisions about the State Pension age.

The committee says no updated assessment is planned until after the increase has been completed, leaving the Government without a clear understanding of how many people could be affected.

It warned that opportunities to introduce measures to reduce hardship may already have been missed.

Benefit boost would cost a fraction of pension savings

• The committee has backed proposals to temporarily increase Universal Credit payments for affected 66-year-olds.
• According to evidence presented during the inquiry, the measure would cost around £600 million.
• That compares with an estimated £10.5 billion the Treasury is expected to save from increasing the State Pension age.

What happens next?

The committee wants the Government to consult on the proposed benefit increase immediately and introduce it before the end of 2026 as a temporary measure.

Longer term, MPs say ministers need a wider strategy to support older workers through employment, health and benefits reforms before any future increases to the State Pension age.

Dr Andrea Barry, Deputy Director for Work at the Centre for Ageing Better, (Image: Ageing Better)

Dr Andrea Barry, Deputy Director for Work at the Centre for Ageing Better, welcomed the report.

She said: “We really welcome the committee’s excellent report and hope it causes the government to step up and take urgent action to tackle an entirely foreseeable increase in poverty caused by another rise in the state pension age.

“Our own work has shown what a financially troubling time the 60s can be for a sizeable minority in this country.

Recommended reading:

“Poverty peaks just before State Pension age and the previous increase of the State Pension age to 66 doubled poverty levels amongst those on the cusp of that age.

“The committee has warned that this time, the poverty increases could be even bigger.”

She added that increasing Universal Credit for 66-year-olds would represent only a small proportion of the savings generated by raising the State Pension age.